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Daily Economic Update
11.08.2025Egypt: Inflation eased to 3-month low in July. Consumer price inflation eased to a three-month low of 13.9% (-0.5% m/m) in July from 14.9% in June. July’s reading came counter to expectations and is the second consecutive month of disinflation after price rises reached a four-month high of 16.8% in May. The lower reading was thanks to moderating food inflation, which dropped from 6.9% in June to 3.4% (-3.0% m/m), its lowest level in over four years. Inflation also eased in other categories, including restaurants and hotels (15.7% y/y from 17.3%), clothing (14.9% from 16%), and furnishings (12.9% from 13.8%). However core inflation edged up slightly to 11.6% y/y from 11.4% in June. Overall inflation readings could still edge up ahead due to the indirect impact of fiscal consolidation efforts, including the expected revision of electricity tariffs and recent VAT amendments, while price rises in some items (such as fruit, electricity and fuel) remain elevated. The Central Bank of Egypt will seek to balance any upside inflation risks with the need to stimulate economic growth (which is estimated to have been broadly steady in Q2 2025 at 4.8% y/y) at its next policy meeting on August 28. Having left rates on hold in July, the latest lower headline inflation outturn increases the chances that the rate cutting cycle will resume.
Kuwait: KAPP signs agreement on KD1 billion power project. The Kuwait Authority for Partnership Projects (KAPP) announced yesterday a commitment agreement to implement phases 2 & 3 of North Al-Zour IWPP, with the value of the project exceeding KD1 billion. Investors Acwa Power & Gulf Investment will be responsible for the design, financing, construction and operation of the facility. This marks one of the country’s largest power & water projects, with the capacity to produce 2.7GW and desalinate 120 imperial gallons per day. Completion is expected in 2028. Kuwait has recently faced electricity blackouts during the summer season as demand for cooling soars while the available power generation infrastructure is limited and unable to cope despite higher electricity imports from the GCC Interconnection Authority. To help further ease the electricity shortages, Kuwait has signed framework agreements with China to develop the Al-Shagaya zones 3 & 4 and the Al-Abdaliya solar power projects, with a combined capacity of 3.2GW. The authorities hope to sign the implementation agreement with China in Q1 26. The agreement will help boost the share of renewable energy in the state’s total energy mix in line with “Vision 2035” goals.
Oil: Prices fall on prospects of US-Russia deal. Brent closed down on Friday at its lowest level in two months, at $66.6/bbl (-4.4% w/w), after US president Trump announced that he will sit with Russian president Putin in a bilateral meeting shortly to negotiate a ceasefire in the Russia-Ukraine conflict. Markets take the view that a ceasefire, as a prelude to a longer-term peace deal, would tend to favor Russia, and likely to include a lifting of US and international sanctions including secondary sanctions on purchasers of Russian crude, such as India, which has been facing tariffs of up to 50%, and more freely-flowing Russian crude. This outcome would likely exacerbate the supply overhang that is developing on the back of the complete unwinding, a year ahead of schedule, of one tranche of OPEC+’s voluntary supply cuts. Also in the spotlight this week will be the release of the monthly oil market reports from OPEC and the International Energy Agency (IEA), which are due on Tuesday and Wednesday, respectively, and which traders will be parsing for clues about the state of global oil demand. The IEA could take on board the IMF’s recent upgrade to global economic growth and revise up its own oil demand growth estimates slightly in 2025-2026.
Global: A critical US CPI report, Q2 GDP in the UK/Japan, and Trump-Putin meeting key matters this week. The Trump-Putin meeting on Friday in Alaska and confirmation about the US-China trade agreement extension beyond this Tuesday’s deadline are key matters this week. In addition, in the coming weeks, we might start hearing from US courts about the legality of Trump’s reciprocal tariffs, noting that Trump warned the courts a few days ago not to block his tariff policy. In terms of data releases, in the US, the July CPI, which is due on Tuesday, is very important, with consensus estimates pointing to higher headline and core rates of 2.8% y/y and 3% from June’s 2.7% and 2.9%, respectively. On a monthly basis, core price rises are also seen accelerating to 0.3% from 0.2%. US inflation prints have been broadly benign recently (for example, core inflation undershot estimates for five straight months), but the July CPI will be a key test, noting that in June we already saw signs of higher inflation for some consumer goods. Estimates also indicate producer prices (due on Thursday) rising by 0.2% m/m in July after being steady in June. Retail sales for July (on Friday) are expected to rise by 0.5% m/m following an increase of 0.6% in June. In the UK, GDP growth for Q2 (Thursday) is projected to slow to 0.1% q/q after Q1’s 0.7%, as the trend of front-running US tariffs unwinds. Prior to this, the latest employment data will be released on Tuesday, with the street forecasting a steady unemployment rate of 4.7% in June but slowing annual wage growth of 4.7% y/y in April-June from 5% earlier. In China, retail sales growth for July (Friday) is seen unchanged at 4.8% y/y while the market expects industrial production to rise 5.8% down from 6.8% in June. Finally in Japan, Q2 GDP (Friday) is seen increasing 0.1% q/q after Q1’s flat performance.