Egypt's annual urban inflation slowed to 12.7% in October from 13.9% in September, and core inflation fell by a full percentage point to 13.1%, according to figures released by the Central Bank of Egypt on Monday, Nov. 9. The data arrived less than two weeks after the bank surprised markets with a rate increase it described as pre-emptive.

Monthly urban headline prices rose 0.7% in October, compared with 1.3% in September and 1.8% in October 2025, based on data from the Central Agency for Public Mobilization and Statistics (CAPMAS), Arab Finance reported. For investors in Asia and elsewhere who hold Egyptian Treasury bills, the cooler reading widens the gap between local yields and inflation. Real returns on pound assets improved just as banks lifted deposit rates.

Egypt's core inflation eases after the surprise hike

The central bank's core measure rose 1.2% on the month in October, up from 0.8% in September but below the 2% recorded a year earlier, the bank's data showed. On an annual basis, core inflation slowed to 13.1% from 14.1%.

CAPMAS had already reported on Nov. 5 that nationwide headline inflation, which covers rural as well as urban areas, eased to 12% in October from 12.8% in September.

The Monetary Policy Committee raised its key rates by 100 basis points at its meeting on Thursday, Oct. 29, lifting the overnight deposit rate to 20%. Capital Times reported on the surprise rate hike as the pound slid to record lows.

Lenders have followed the central bank. The state-owned National Bank of Egypt raised the yield on its fixed-rate Platinum certificates of deposit by 1 percentage point, to 18.75% for monthly payouts and 18.85% for quarterly payouts, effective Nov. 8, Egypt Independent reported. With urban inflation at 12.7%, that leaves savers a positive real return of about 6 percentage points before tax.

October's monthly slowdown matters because September's 1.3% rise had come as the pound weakened, raising fears that a softer currency would feed through to shop prices. A single month does not settle that question, but the core reading suggests underlying price pressure was easing even before the rate increase took effect.

Reserves at a record as Cairo stresses foreign inflows

Egypt's net international reserves rose to $57.5 billion at the end of October from $57.35 billion a month earlier, according to central bank data cited by Arab Finance. That compares with $50.07 billion in October 2025. Gold holdings were worth $16.84 billion, up from $16.55 billion a year earlier, and special drawing rights at the International Monetary Fund stood at $599 million against $179 million.

The reserves have set records for several months in a row. At the end of September they stood at about $57.35 billion, and the banking sector's net foreign assets had risen to $31.2 billion by the end of August, the highest since 2011, Egypt Independent reported in October.

President Abdel Fattah al-Sisi met Prime Minister Mostafa Madbouly, Central Bank Governor Hassan Abdalla and Finance Minister Ahmed Kouchouk on Nov. 9 and called for further cuts in inflation and public debt and for stronger foreign currency inflows, Daily News Egypt reported. Abdalla told the meeting that net foreign assets in the banking sector had reached their highest level since 2011 and that the bank would keep a flexible exchange rate set by market forces. Kouchouk said the government was preparing tax, customs and real estate incentives to draw more private investment.

Egypt's main sources of hard currency are remittances from Egyptians working abroad, export earnings and Suez Canal fees. For Asian shippers and exporters, Suez traffic is the link: every Asia-Europe container service that returns to the canal adds to the hard currency Cairo is trying to build.

What the October data means for rates

Slower inflation and record reserves ease the pressure for a second increase. With core inflation now at 13.1% and the deposit rate at 20%, Egypt's real policy rate is close to 7 percentage points. Savers and foreign holders of pound debt are paid well above inflation.

Demand for local debt stays in focus: the Central Bank of Egypt issued 14 billion Egyptian pounds of Treasury bonds on Nov. 9, Arab Finance reported.

The next test is the November inflation report from CAPMAS, due in December, followed by the committee's next rate decision.