Annual headline inflation should slow down to about 3% in October, down from 4.8% in September, according to Renaissance Capital’s Consumer Price Index (CPI) report. The report notes that the combined weight of the volatile fruits and vegetables has dropped to 6% in September from 18%, while other food and beverages items lost 7.8% in base weight. And this comes despite school tuition hikes in October coming into play.

RenCap sees 50 bps rate cut in November: The report adds that the current Central Bank of Egypt discount rate of 13.75% should be enough to stimulate private investment and a rebound in consumption growth and allow for an additional 50 bps cut on 14 November.

Renaissance Capital is expecting the EGP to depreciate once again, despite positive readings of the Egypt Balance of Payments. However, the investment bank sees this happening at a controlled pace. It did not state when it expects the depreciation to begin and by how much.

Background: Headline inflation had dropped for the fourth consecutive month to 4.3% in September from 7.5% in August, while annual core inflation almost halved to 2.6% from 4.9%. Radwa El Swaify, head of research at Pharos, had said that government focus on food supply has continued to keep inflation lower than expectations. The base effect remained a key factor in explaining the lower inflation readings, alongside the strength of the EGP and “more cautious spending behavior,” Beltone Financial said in a research note.