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Daily Economic Update
11.09.2025Egypt: Inflation slows to a more than three-year-low of 11.2% in August. Consumer price inflation in Egypt (national rate) eased for a third consecutive month in August, reaching 11.2% y/y (0.2% m/m) from 13.2% in July. August’s reading is the lowest this year, driven by deceleration in the foods (1.3% y/y; 0.1% m/m), transport services (21.4% y/y; -0.3% m/m) and recreational activities (15.2% y/y; -3.1% m/m) categories. Indeed, both transport and recreational services witnessed their first month-on-month deflation in more than three years and one year, respectively. The deceleration in inflation exactly matched the size of the interest rate cut made in the same month by 200 basis points (bp). Therefore, the real interest rate remains stable at 11% – one of the highest in the world. Looking forward, we expect inflation to decelerate further in September to 10.5% y/y before picking up again in the last quarter of the year amid the expected hike in energy prices (fuel, gas, and electricity) as the government looks to pare back subsidies as part of the IMF-advised fiscal consolidation measures. This reading along with the expected reading for September should pave the way for another albeit more cautious interest rate cut of 100 bp in October by the Central Bank of Egypt’s monetary policy committee.
Saudi Arabia: Industrial production growth remained strong in July. Industrial production growth remained strong in July, with the Industrial Production Index rising by 6.5% y/y (1.3% m/m) from 6.1% in June, driven primarily by a strong expansion in oil activity (7.8% y/y from 7.2% in June). This was on the back of a significant rise in both crude and refined petroleum products output, in line with the continued unwinding of OPEC-8 voluntary oil production cuts. Manufacturing (excluding refining) activity, meanwhile, accelerated to 3.7% y/y (from 3.4%), led by strong growth in metallic and chemical products, which more than offset steep declines in paper, basic metals, and furniture manufacturing. Water supply and waste management activities growth remained strong (8.5%), linked to efforts to support urban development and increase industrial capacity.
US: Unexpected decline in PPI inflation underscores uneven impact of tariffs on prices. US wholesale prices (PPI inflation for final demand) in August surprisingly dropped by 0.1% m/m from a downwardly revised yet outsized increase of 0.7% in July. This was driven by a fall in energy costs and a sharp drop in margins for trade services. On an annual basis, PPI inflation slowed to 2.6% y/y from July’s four-month high of 3.1%. A narrow measure of wholesale prices, which excludes energy, food, and trade services, however, rose to a five-month high of 2.8% y/y from 2.7% in July (though still relatively modest versus prior levels). The impact of tariffs on prices is likely to take more time to be reflected in the numbers, especially as the Trump administration continues to roll out new duty measures – several sectoral tariffs are in the pipeline – stoking more uncertainty over the coming months. As a reminder, consumer price inflation data for August will be released later today, with the consensus projecting an uptick in the headline rate to 2.9% y/y (from 2.7% in July) but a steady core rate of 3.1%. Absent a major disappointment in the CPI, given weakening labor market conditions, the street is expecting the Fed to resume monetary easing with a 25-bps interest rate cut at the FOMC meeting next week.
Japan: Producer prices rise by 2.7% y/y in August amid persistent food inflation. Producer prices continued to demonstrate significant, though moderating, inflationary pressures, rising by 2.7% y/y in August from a revised 2.5% in July. Monthly growth was relatively flat, though, reflecting subdued momentum in the prices of intermediate goods. Prices rose for non-ferrous metals (6.2% y/y versus 0.3% in July), beverages & foods (5.0% versus 4.7%), and transport equipment (2% versus 1.8%). On the other hand, utilities (electricity, gas and water) declined by 2.9% y/y, aided by government subsidies, which partially offset some of the inflationary pressures. Upward price pressures are gradually easing, but inflation is likely to remain above the Bank of Japan’s (BoJ) 2% policy target, and the recent upward revision to GDP growth in Q2 could help the bank’s case in monetary tightening. However, BoJ board member Kazuyuki Masu recently warned that the bank should not rush into raising rates given the prevalence of various economic risks, stressing the need for prudence in rolling back the bank’s accommodative policy. Producer price data, which is viewed as a leading indicator of consumer inflation, will likely be among the factors the BoJ will scrutinize at its next policy meeting on September 18-19.