Have we hit peak inflation? Annual urban headline inflation stood at 31.9% in August, down from 33.0% a month earlier, according to CAPMAS. The core inflation rate came in at 34.86%, dropping from 35.26% in July. Inflation rates showed a deceleration in food price inflation, although it was still the main driver behind the 1.1% m-o-m headline inflation rate. “The numbers indicate that the positive base effect has indeed kicked in … supporting our view that inflation has likely peaked in August,” EFG Hermes’ Abu Basha wrote in a note yesterday.

Inflation to hit 20s by November / December? Abu Basha expects inflation rates to fall “into the 20s% in November as the positive base effect sets in at an accelerated pace. We see inflation at 20-22% in December before falling to high teens in January,” potentially setting up an interest rate cut in early 2018. Arqaam Capital senior economist Reham El Desoki tells Bloomberg, “This month’s figures suggest that businesses were not able to pass on the full extent of the increase in costs to consumers so as not to hurt demand for their products and services … Inflation should remain within the same range in the coming two months before falling to the mid-twenties range in November.” Allen Sandeep, head of research at Naeem, tells Reuters he expects inflation could “cool off” even before November if the appreciation in the EGP becomes more sizable.

…Separately, the central bank announced (pdf) that inflows of remittances hit USD 1.8 bn in July, up 43.9% y-o-y. The total inflows in the period of November 2016 to July 2017 have increased by USD 1.9 bn to USD 14.5 bn, the statement added. The central bank says this increase is a direct result of the EGP float.