Urban inflation is the benchmark figure that the Central Bank of Egypt uses to measure prices.

Cairo-based investment bank EFG-Hermes expects the central bank to cut interest rates by a further 50 basis points when it meets on 30 July.

The central bank has lowered overnight deposit rates by 250 basis points to 9 per cent and overnight lending rates by 300 basis points to 10.5 per cent in 2009 (MEED 22:6:09).

“Inflation is still elevated, but the risks appear to be to the downside due a poor outlook for growth,” according to a EFG-Hermes statement on 9 July.

Economic growth reached 4.3 per cent in the first quarter, up from 4.1 per cent in the fourth quarter of 2008.

Private sector credit growth fell to 7.1 per cent in May, marking a three-year low.

“We believe inflation will fall to an average 9.1% year-on-year in the [current fiscal year], which started on 1 July,” according to EFG-Hermes.