Annual headline urban inflation accelerated for the second consecutive month to 5.7% in November from 4.6% in October, according to Capmas figures (pdf) released on Thursday. The increase was driven by higher food prices, which single-handedly brought annual inflation to its highest since May. Monthly headline figures remained muted at 0.8%, but higher than 0.3% in November 2019. The monthly rate was, however, lower than October’s 1.8%.

Food prices across the country edged up 3.2% on a monthly basis (and 4% y-o-y), Capmas said. Vegetable prices were the culprit, increasing over 25% on a monthly and annual basis, and offsetting a softer drop in the price of fruits.

Annual core inflation — which strips out volatile items such as food and fuel — rose marginally to 4% in November, from 3.9% last month, according to central bank figures (pdf). Monthly core inflation, meanwhile, fell to 0 from 1.7% in October.

The increase in the annual rate was higher than expected, Pharos head of research Radwa El Swaify said on Thursday. Pharos had forecast an annual headline rate of 5.1% in November and a monthly rate of 0.3%.

Inflation is expected to accelerate in the coming months as food prices are likely to increase further and as the price of Brent crude rebounds, Capital Economics said. The EGP is also forecast to weaken in the months ahead, adding pressure on the headline rate. However, inflation isn’t likely to exceed the mid-point of the CBE’s range, it added.

That hasn’t dampened hope for further rate cuts: Policymakers are expected to keep rates unchanged in their upcoming meeting, after having already lowered rates by 400 basis points so far into the year, El Swaify said. Beltone Financial echoed El Swaify, saying it expects rates to remain unchanged and that it holds the view “that the 400 bps policy rate cut to support domestic economic activity is still channeling its trickle down effect into the economy.” That said, “the door is open for interest rates to be lowered further over the next twelve months,” added Capital Economics, which expects 100 bps in cuts by the end of 2021. “With inflation likely to remain subdued and talks with the IMF set to result in the Fund giving the green light for further monetary easing,” the London-headquartered research house said.

The CBE cut interest rates at its most recent meeting by 50 bps earlier in November, its second consecutive rate cut and fourth since the pandemic struck in March. The CBE’s Monetary Policy Committee next meets on Thursday, 24 December to review interest rates.