Urban consumer price inflation dropped to 26% in November, down from 30.8% a year ago. On a monthly basis, the inflation rate dropped to 1% in November, from 1.1% in October, according to state statistics bureau CAPMAS. Finance Minister Amr El Garhy says the inflation rate is set to drop to 20% in January and to reach 13-14% by August, according to Reuters. Annual core inflation fell to 25.54% in November, down from 30.53% in October. On a monthly basis, core inflation recorded 1.3% in November from 0.7 a month earlier, data from the central bank shows (pdf).

Enter the base effect: EFG Hermes’ Mohamed Abu Basha says the deceleration seen in November “officially kicks off a long-awaited period, where a favourable base effect kicks in and leads inflation to decelerate rapidly from its near four-decade highs of +30%.” The headline rate came “generally within expectations. I think it is likely that the central bank will begin cutting rates but not at the next meeting in December, at the one after," Arqaam Capital senior economist Reham El Desoki tells Bloomberg. She expects the central bank to cut rates by about 500 bps throughout 2018. Abu Basha has a similar rate outlook, saying, “While we see chances for a rate cut at the MPC’s next meeting on 28 Dec, we expect CBE to only start cutting rates in 1Q18 in order to ensure the extent of the expected slowdown is, indeed, in line with CBE’s expectations. This is especially the case, given two recent developments which resemble potential upside risks to inflation, namely i) continued acceleration in GDP growth in 1Q17/18, along with recent readings showing the private sector starting to recover; and ii) rise in oil prices.”