Egypt’s annual headline inflation rate had fallen to a four-year low, dipping to 8.7% in July from 9.4% a month earlier, despite the fresh round of subsidy cuts that pushed domestic fuel prices up by 16-30%, Invest-Gate reports.

Monthly core CPI inflation, computed by the Central Bank of Egypt (CBE), dropped to 0.1% in July versus 0.3% in the previous month, and 0.6% during July 2018, the Central Agency for Public Mobilization and Statistics (CAPMAS) said in an official statement on August 8.

“Hence, the annual core inflation rate recorded 5.9% in July, compared to 6.4% in June,” read the statement.

Commenting on the major event, Allen Sandeep, head of research at Naeem Brokerage, told Reuters, “It is great news for the markets because it reinforces hopes of interest rate cuts in August. I think the [CBE] now has enough room to restart its monetary easing policy going forward.”

Egypt is nearing the end of a three-year USD 12 bn International Monetary Fund (IMF) economic reform program that saw inflation rise to a high of 33% in 2017, on the back of the second phase of energy subsidy cuts and EGP flotation in November 2016. Inflation then gradually decreased as inflationary pressure was eased.