Inflation is showing signs of cooling: You may now breathe a (tentative) sigh of relief. Consumer price inflation cooled again in March, standing at 2.0% month-on-month compared to February. M-o-m inflation was 2.63% in February and 4.07% in January. The annualized rated accelerated to 30.9%, up from 30.2% in February, its slowest gain in five months. The core inflation rate fell to 32.25% y-o-y in March from 33.1% a month earlier, the central bank said. The drop in the core rates is the first since November. “The initial price shock seems to be tapering off … Sharp changes in prices in the future will be linked to further reform measures, the usual fluctuation in the exchange rate or seasons when consumer demand increases,” Reham El Desoki, senior economist at Arqaam Capital told Bloomberg.

Inflation will be impacted by two seasonal factors in the coming two months, argues Pharos Holdings’ Ramy Oraby in a research note issued yesterday: The month of Ramadan, in which prices usually increase, and the wheat harvest season, “which tends to diffuse sharp food price movements.” He also adds that “at the current exchange rate level, the pass-through risks remain limited.”