Egypt CPI for January 2026: Inflation Slows to 11.2%, Raising Hopes for Policy Shift
Egypt’s headline inflation cooled further in January 2026, with the Consumer Price Index (CPI) registering 11.2% year-over-year, according to the latest Sigmanomics database release. This marks a notable drop from December 2025’s 11.8% and is the lowest reading since September 2025. The data offers fresh insight into Egypt’s macroeconomic trajectory as policymakers weigh the next steps for rates, currency, and fiscal management.
Table of Contents
Big-Picture Snapshot
Egypt’s CPI for January 2026 printed at 11.2% year-over-year, down from December 2025’s 11.8% and well below the recent peak of 12.5% in November 2025. This marks the third consecutive monthly decline, with inflation now 1.3 percentage points below its 12-month average of 12.5%.
Drivers this month
- Food inflation moderated, contributing -0.25 percentage points to the headline drop.
- Transport and energy prices remained stable, adding only 0.05 percentage points.
- Shelter costs decelerated, subtracting 0.10 percentage points from overall inflation.
Policy pulse
The Central Bank of Egypt’s (CBE) inflation target band remains 7% (+/-2%). January’s 11.2% reading, while still above target, narrows the gap and may ease pressure for further rate hikes. The CBE has held its policy rate at 19.25% since October 2025, citing persistent inflation risks and currency volatility.
Market lens
Immediate reaction: EGPUSD firmed 0.3% in the first hour after the print, while 2-year EGP bond yields dipped 12 bps. The EGX30 equity index rose 0.7%, reflecting improved investor sentiment on easing price pressures.
Foundational Indicators
January’s CPI deceleration follows a volatile inflation path in late 2025. After peaking at 12.5% in November, inflation fell to 12.3% in December and now 11.2% in January. For context, September 2025 saw a 10.7% reading, while October spiked to 11.7%.
Drivers this month
- Food and beverage prices, which make up over 40% of the CPI basket, slowed to 13.1% YoY from 14.0% in December.
- Core inflation (excluding volatile items) is estimated at 9.8%, down from 10.4% last month.
- Imported goods inflation eased as the EGP stabilized against the USD.
Policy pulse
Fiscal policy remains expansionary, with the government targeting infrastructure and social spending. However, the budget deficit widened to 7.1% of GDP in 2025, raising concerns about debt sustainability if inflation persists. The Ministry of Finance has signaled no immediate spending cuts, banking on lower inflation to ease subsidy costs.
Market lens
Foreign investors have returned to Egypt’s local currency debt market, with inflows of $0.8 billion in January. The EGP’s relative stability and falling inflation risk have improved the risk-reward profile for Egyptian assets.
Chart Dynamics
Drivers this month
- Food: -0.25 pp (largest contributor to the decline)
- Shelter: -0.10 pp
- Transport: +0.05 pp (minor upward pressure)
Policy pulse
The CBE’s real policy rate (nominal minus inflation) has improved, now at 8.05% versus 6.95% in December. This strengthens the case for a pause or even a rate cut if disinflation persists.
Market lens
Immediate reaction: EGPUSD gained 0.3% as traders priced in a lower inflation risk premium. The EGX30 index’s 0.7% rise and narrowing bond spreads signal growing confidence in Egypt’s macro stability.
Forward Outlook
With inflation easing, Egypt’s macro outlook is shifting. The base case (60% probability) sees CPI drifting toward 10% by mid-2026, assuming food prices remain contained and the EGP stable. A bullish scenario (25% probability) envisions inflation dropping below 9% if global commodity prices soften and fiscal consolidation accelerates. The bearish case (15%) would see inflation rebound above 12% if external shocks—such as renewed energy price spikes or currency depreciation—materialize.
Drivers this month
- Global food and energy prices remain the key swing factors for Egypt’s inflation path.
- Domestic wage growth and subsidy reforms could add upside risk.
Policy pulse
With inflation falling, the CBE may consider a rate cut in Q2 2026 if the trend persists. However, policymakers remain cautious given Egypt’s history of currency volatility and external financing needs.
Market lens
Immediate reaction: EGPUSD’s modest gain and falling bond yields reflect market optimism for a policy pivot. Investors will watch for signals from the CBE’s next meeting and any changes to fiscal plans.
Closing Thoughts
Egypt’s January 2026 CPI print marks a clear inflection point, with inflation falling to its lowest in four months. The data supports a cautiously optimistic outlook for monetary policy, the EGP, and local assets. Risks remain—especially from external shocks and fiscal slippage—but the trend is encouraging. Policymakers and investors alike will be watching for confirmation in the coming months.
Key Markets Likely to React to CPI
Egypt’s CPI readings have a direct impact on local and global markets, especially those sensitive to inflation, currency, and risk sentiment. The following symbols are most likely to react, given their historical correlation with Egyptian inflation trends and macro policy shifts:
- EGX30 – Egypt’s main equity index, highly sensitive to inflation and monetary policy shifts.
- EGPUSD – The Egyptian pound vs. US dollar; tracks inflation-driven currency moves.
- EURUSD – Euro vs. US dollar; reflects global risk appetite and EM currency flows.
- ORAS – Orascom Construction, a major Egyptian stock, often moves with inflation and infrastructure spending.
- BTCUSD – Bitcoin vs. US dollar; sometimes viewed as a hedge against EM inflation and currency risk.
| Year | CPI (%) | EGX30 YoY (%) |
|---|---|---|
| 2020 | 5.7 | -22.1 |
| 2021 | 6.2 | +9.1 |
| 2022 | 8.5 | +12.7 |
| 2023 | 13.9 | +7.8 |
| 2024 | 12.4 | +14.3 |
| 2025 | 12.5 | +4.6 |
EGX30 returns have tended to lag during inflation spikes, but rallied as inflation moderated, highlighting the index’s sensitivity to CPI trends.
FAQ
Q: What is Egypt’s CPI for January 2026?
A: Egypt’s CPI for January 2026 was 11.2% year-over-year, down from 11.8% in December 2025.
Q: Why did inflation fall in January 2026?
A: The main drivers were moderating food prices, stable energy costs, and a steady EGP, according to the Sigmanomics database.
Q: How will this affect Egyptian markets?
A: Lower inflation may prompt the central bank to pause or cut rates, supporting the EGP and boosting equities like EGX30 and ORAS.
Bottom line: Egypt’s January 2026 CPI drop signals a turning point, with easing inflation improving the outlook for policy, currency, and markets.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 2/10/26
- Sigmanomics database, Egypt CPI time series, accessed February 10, 2026.
- Central Bank of Egypt, Monetary Policy Statements, 2025–2026.
- Ministry of Finance, Egypt Fiscal Reports, 2025.
- EGX30 Index, Sigmanomics Market Data, 2020–2026.
January’s CPI print of 11.2% is down from December’s 11.8% and well below the 12-month average of 12.5%. The three-month trend shows a steady deceleration: November 2025 at 12.5%, December at 11.8%, and January at 11.2%. This reversal follows a mid-2025 surge, when inflation climbed from 10.7% in September to a peak in November.
Compared to the same period last year (January 2025), when inflation was running at 13.2%, the current reading marks a 2 percentage point improvement. The chart below illustrates this downward trajectory, with the CPI line trending lower for three consecutive months.