Egypt’s annual inflation rate rose in October 2025 for the first time in five months, driven by a government fuel price hike that added upward pressure on consumer costs. The increase may prompt the central bank to pause interest rate cuts at its upcoming policy meeting.

Urban consumer prices rose 12.5% year-on-year in October, up from 11.7% in September, according to Egypt’s official statistics agency. On a monthly basis, inflation remained steady at 1.8%, the same pace as the previous month.

The uptick marks a shift after months of slowing inflation, which had eased from a record 38% in September 2023. The recent trend was aided by currency stabilization and favorable comparisons to the previous year’s inflation spike.

Read more: Egypt poised for another interest rate cut ahead of economic reforms

Fuel price hike adds pressure to consumer costs

The reversal came after Egyptian authorities raised fuel prices by up to 13% in late October as part of an IMF-backed reform strategy aimed at improving state finances. The Egypt fuel price hike directly contributed to higher transportation and distribution costs, which in turn filtered into broader consumer prices.

Analysts expect the impact of the increase to continue into next month’s inflation data, particularly in sectors sensitive to fuel costs.

The central bank interest rate in Egypt currently stands at 21%, following a cumulative 625 basis-point reduction since the beginning of 2025. These rate cuts were part of a broader effort to lower debt servicing costs and stimulate investment.

However, the October inflation data may prompt the central bank to adopt a wait-and-see approach when it meets on November 20. Holding rates steady could help maintain investor interest in local debt markets, which remain attractive due to high yields.

Read more: Egypt's President warns of 'unbearable' economic pressure

Egyptian pound gains helped earlier slowdown

Before the October spike, inflation had eased for four consecutive months, partially due to the strengthening of the Egyptian pound in 2025 against the US dollar.

The currency had gained ground following a $57 billion bailout deal supported by the United Arab Emirates and the International Monetary Fund.

As part of that IMF Egypt reform program, authorities implemented a 40% devaluation of the currency and sharply increased interest rates in early 2024 to address a persistent foreign exchange shortage.

Food prices rise slightly amid broader inflation

Food and beverage costs, the largest component of the inflation basket, rose by 1.5% year-on-year in October, compared to 1.4% the previous month. The modest rise in food prices in Egypt may continue as fuel-related cost pressures ripple through the supply chain.

Despite the latest increase, annual inflation remains well below the 2023 highs, though future price movements will depend on currency performance, global commodity trends, and further economic reforms.