Egypt Inflation Rises as Shrinkflation Grows

Egypt’s urban consumer price inflation accelerated to 14.9%, underscoring that price pressures remain elevated even as some economies cool. Colombia’s annual inflation eased to 6.03% in July and Norway’s core inflation held at 2.7%, below expectations, highlighting how unusual Egypt’s reading looks against a softer global inflation backdrop. The contrast matters for central banks and currency markets because it suggests Egypt still faces more entrenched domestic pricing pressure than peers, limiting room for policy ease and keeping real incomes under strain.

For consumer companies, the arithmetic is straightforward. If they cannot fully pass on higher input, logistics or currency costs, they often respond by trimming pack sizes, reducing ingredients or changing formulations. Procter & Gamble has disclosed continued exposure to commodities, raw materials and packaging costs, while Unilever has flagged the effect of currency-related items and hyperinflationary markets on reported results. In Egypt, that dynamic can support reported revenue and nominal unit economics, but it risks alienating price-sensitive shoppers who increasingly compare value rather than shelf prices.

The investor implication is that volume growth may be weaker than it looks, even where reported revenue holds up. Pack-size reductions can mask demand softness for a while, but they rarely solve affordability pressure. That leaves producers, importers and retailers exposed to a trade-off between maintaining margins and preserving brand loyalty, especially if consumer sentiment stays fragile and discretionary spending remains subdued.

The broader narrative is that inflation is becoming less visible rather than less damaging. For households, that means the squeeze is continuing in the supermarket basket, not just in monthly CPI prints. For investors, it raises the bar for earnings quality in consumer staples and consumer-facing retail: the market will increasingly need to distinguish between pricing power and mere shrinkage.