Egyptian Inflation Reaches Highest Level in 5Y, IMF Expects a Decline After 2Y

Egyptians buying fruits in Cairo market (EPA)
Egyptians buying fruits in Cairo market (EPA)
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Egyptian Inflation Reaches Highest Level in 5Y, IMF Expects a Decline After 2Y

Egyptians buying fruits in Cairo market (EPA)
Egyptians buying fruits in Cairo market (EPA)

Egypt's annual urban consumer inflation rose sharply in December to 21.3 percent, its highest level in five years, according to Central Agency for Public Mobilization and Statistics (CAPMAS).

The inflation rate in December was the highest since 2017 when it reached 21.9 percent.

The rise from 18.7 percent in November followed a currency devaluation in October and restrictions on imports.

However, the International Monetary Fund (IMF) expected the inflation to ease to around seven percent by the fiscal year 2024-25.

During a virtual press conference, IMF Assistant Director and Mission Chief for Egypt, Middle East, and Central Asia Department Ivanna Vladkova Hollar estimated a financing gap of about $17 billion over the next four years.

The government directed its ministries to cut unnecessary spending until the end of next June, as it is trying to cope with high inflation and constant pressures on its currency.

The decision, dated Jan. 4 and published in the official gazette this week, includes the postponement of any new national project heavily reliant on foreign currency and requires ministries to seek finance ministry approval on foreign currency expenditure.

The health, interior, foreign, and defense ministries are exempted, as well as agencies tasked with expenditure on subsidized food products and energy.

Some activities listed as non-essential spending include travel, marketing, and conferences, as well as grants and training for employees. The decision had no detail on how much money could be saved.

The move comes as Egypt has faced a foreign currency shortage despite allowing the Egyptian pound to depreciate sharply in recent months, most recently last week.

Egypt has spent heavily on large infrastructure projects in recent years. These include a new capital city east of Cairo and extensive road building, which helped sustain economic activity through the COVID-19 pandemic but have also faced criticism.

As Egypt came under financial pressure in early 2021, the central bank imposed curbs on import financing, causing a heavy backlog of goods at ports.

The reversal of the curbs was a vital requirement of a 46-month financial support package from the International Monetary Fund confirmed in December. Greater exchange rate flexibility was another condition of the IMF deal.

Meanwhile, the World Bank expected growth in Egypt to slow to 4.5 percent in FY2022/23, as high inflation erodes real wages, weighing on domestic consumption.

In its recent report, "Global Economic Prospects," the World Bank warned that weakening external demand growth is also likely to limit activity in the manufacturing and tourism sectors.

Fiscal and monetary policy tightening to rein in high inflation and a large current account deficit are expected to restrain growth further.

The report noted that authorities are gradually dismantling new import rules to contain a balance of payment pressures. However, continued trade disruptions may still occur from, for example, rules governing the sourcing of foreign currency.

Another report by IMF experts showed that according to a letter of intent that Egypt committed to before approving the last loan of $3 billion, the government said it would allow most fuel product prices to rise until they were in line with the country's fuel index mechanism to make up for a slowdown in such increases over the last fiscal year.

Under the facility, the IMF will provide Egypt with about $700 million in the fiscal year that ends in June.

The World Bank will cover $1.1 billion of the year's remaining $5.04 billion financing gap, the Asian Infrastructure Investment Bank $400 million, the African Development Bank $300 million, the Arab Monetary Fund $300 million, the China Development Bank $1.0 billion and public asset sales $2.0 billion, the letter said.

Egypt said it had secured assurances that $28 billion in deposits by Gulf states in the Egyptian central bank would only mature after Sept. 2026 and would not be used to buy equities or debt.



Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)
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Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)

Iraq produces more than 5 million barrels of oil per day (bpd), Oil Minister Basim Mohammed told state news agency INA on Saturday.

According to Reuters, Iraq is pushing for a higher OPEC production quota as the economic fallout from the Iran war and new investment by oil majors increase pressure on Baghdad to boost output, potentially putting it at odds with the producer group.

The conflict has hit Iraq particularly hard, forcing major export cuts and depriving the state of oil revenue, which accounted for 88% of government income last year.


IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
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IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)

Central bankers around the world would need to consider any slowdown in AI-driven growth as they assess steps in their fight against inflation, International Monetary Fund Managing Director Kristalina Georgieva said on Friday.

Georgieva said concerns about dependence on the AI investment boom and high valuations were impacting markets around the world.

"Things are going up and down, and this is likely to continue," she told an audience at IMF headquarters in Washington, adding that the volatility would complicate the job of central banks at a time when risks to price stability had been growing.

A steep rout in technology stocks on Thursday rippled through markets on fears that ⁠the Democrats' victory ⁠in the US midterm elections would increase regulatory scrutiny of AI and slow the data center build-out, sending investors to the safety of bonds.

The political jitters are hitting an AI trade already on shaky footing due to worry about return on massive spending on AI-related infrastructure, with the meltdown spurring margin calls and spooking retail investors and hedge ⁠funds alike.

Georgieva said the AI investment boom was lifting growth in some countries, helping to offset a negative oil-supply shock triggered by the war in the Middle East, but it was also adding to inflationary pressures and financial stability concerns.

The IMF last month flagged significant growth and financial stability risks from a potential ending of the AI investment boom, among other factors, including a prolonged Middle East war. At the time, it warned that a steep drop in AI investment could lead to a sharp fall in asset prices, ultimately cutting global GDP ⁠by 1.1% ⁠by 2028, including a 1.8% drop in US output.

Georgieva did not repeat the downside forecast on Friday, but acknowledged the recent market volatility.

"Should there be a slowdown in the AI-driven growth impulse, it would need to be factored in as central banks assess the necessary steps in the fight against stubborn inflation," she said.

Democrats are planning to unleash a flood of new legislation targeting artificial intelligence systems and data-center development when they take control of the US Congress in January, Reuters reported on Friday, citing congressional aides and advocates.

That would mark a sharp shift from the Republican-led Congress, where lawmakers largely focused on promoting AI development and declined to pass legislation restricting the technology.


World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
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World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)

World food prices edged lower in October as weaker import demand contributed to monthly declines in cereal, dairy and meat prices, but were still nearly 6% higher than a year earlier, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks monthly changes in international prices for a basket of food commodities, ‌averaged 133.9 points ‌in October, down from a revised ‌135.6 ⁠in September.

The index ⁠was 5.9% higher than a year earlier, but remained 16.4% below its March 2022 peak.

FAO's cereal price index fell 4.5% from September and was 12.6% lower than a year ago, as wheat and maize quotations declined. Wheat prices eased on weak import demand ⁠and improved production prospects, especially in Argentina.

"Expectations of ‌easing constraints on Black ‌Sea export flows added to the downward pressure on prices, ‌although continued disruptions to Black Sea logistics limited the decline," ‌FAO said in a statement.

Maize prices also eased after reaching a three-year high in September, pressured by the US harvest, expectations of ample supplies in South America and renewed ‌prospects of easing tensions in the Black Sea region.

Vegetable oil prices edged up 0.3%, ⁠as ⁠higher soybean and sunflower oil prices more than offset a fall in rapeseed oil prices.

Sugar prices rose 6.6%, their fourth straight monthly increase, to the highest level since December 2024, after rainfall disrupted harvesting in Brazil. They were now 28.8% above a year ago.

The dairy index fell 1.1%, as lower butter and cheese prices linked to ample supplies and subdued demand outweighed gains in milk powder.

The meat index declined 1.2%, while still slightly above its year-earlier level, as ovine and bovine meat prices fell.