Inflationary pressures building

Headline inflation has risen further across the region in recent months. This has been most pronounced in the non-Gulf economies which have been particularly exposed to spillovers from the war in Ukraine due to their positions as large net commodity importers. In Egypt, rising inflation and mounting pressure on the pound means that the central bank will probably be forced to resume its tightening cycle in the coming months. The Gulf states have avoided the surge in inflation seen in much of the rest of the world. A key reason for this is that governments have introduced local fuel price caps, which have shielded firms and households from the rise in global energy prices.