Egypt's headline inflation is forecast to have softened to 11.7% in January from ‍12.3% in December, a ‍Reuters poll found on Thursday, with analysts saying that a ​favourable base effect and cooling food prices had helped.

The median forecast for annual ⁠headline urban consumer inflation was calculated from a poll of 18 analysts carried out from ⁠January 29 ‌to February 5.

"A stronger pound, easing transport and food inflation will be the primary drivers of the slowdown in Egypt's ⁠inflation rate," James Swanston of Capital Economics said.

Annual inflation has plummeted from a record high of 38% in September 2023, helped by an $8 billion financial support package signed with the IMF in March 2024.

"A ⁠relatively favourable base effect in ​January is expected to show up in the January 2026 figure, cushioning an expected rise in the ‍food and beverage item," said Esraa Ahmed of investment firm Thndr.

Five analysts also provided ​forecasts for core inflation, which excludes volatile items such as certain food and fuel products, predicting it would edge down to a median 11.5% from 11.8% in December.

An expansion in money supply has helped to fuel inflation. M2 money supply growth accelerated to an annual 20.5% in December from 20.14% in November, after having slowed from a peak of 31.5% in January 2023, central bank data showed.

Slowing inflation prompted the central bank to cut its overnight lending ⁠rate by 100 basis points to 21.00% ‌in December, bringing total cuts in 2025 to 725 points.

The bank's monetary policy committee is next scheduled to review overnight interest rates on February ‌12.

The state ⁠statistics agency Capmas is scheduled to release January inflation data on Tuesday.

(Polling by ⁠Anant Chandak; Writing by Patrick Werr; Editing by Jane Merriman)