Monthly urban core inflation has recorded its lowest level since December 2015, registering 0.19% in September, according to central bank data. Headline inflation also slowed down to 1.00% m-o-m.

On an annual basis, the headline rate dropped to 31.59% (down from 31.95% in August), with core inflation falling to 33.26% (from 34.86% in August). Explaining the rise in households’ water and gas bills, CAPMAS reports that the prices of water went up by 52.7% m-o-m and natural gas by 20.5% m-o-m.

Food and beverage prices were up 42.2% y-o-y in September on the back of rising prices of meat, poultry and dairy.

Expect war with manufacturers after snap decree orders food producers to print retail prices on packaging: Supply Minister Ali El Moselhy issued a decree on Tuesday that will force food producers to print “clear” price labels on their packages, Ahram Online reports, citing the state news agency. The decision, which was published in the Official Gazette yesterday, will allow retailers to sell unlabeled goods until 31 December, after which they will be subject to prison sentences of up to five years and fines ranging from EGP 300-1,000. The regulations are meant to help curb inflation by unifying prices across the board.

That socialist-statist impulse just isn’t going to go away anytime soon, ladies and gentlemen. Witness yesterday’s venting of spleens in the House of Representatives as Speaker Ali Abdel Aal lambasted the government for not taking seriously the “monopolistic nature” of the pharma market, which he and house majority bloc boss Mohamed Elsewedy said was allowing “unjustified” price increases, according to Al Ahram. Beating up on the private sector over inflation is going to be a core theme this fall.

A recent visit to Cairo by BNP Paribas reps reaffirmed the bank’s “positive outlook on the Egyptian economy, whilst highlighted the key challenge of competitiveness in the medium term,” according to trip notes sent to Enterprise (pdf). “Ongoing reforms (monetary and fiscal) have put the Egyptian economy on the right track. Nevertheless, the medium-term prospects are still challenged… The next challenges are execution of remaining reforms as well as achieving a sustained and inclusive economic growth.”

Economist Pascal Devaux writes that the “FX market is increasingly liquid and EGP flotation has been a success by the CBE. The BoP is improving rapidly and overseas repatriation is progressing as well. All backlogs have been eliminated and the USD interbank market is growing. IMF objectives in terms of net international reserves (NIR) have been outperformed.” Devaux points to a “relative consensus that the EGP will appreciate in 2018,” but, in the medium term, “we expect a gradual depreciation in order to preserve Egypt’s external competitiveness in a context of high, albeit declining, inflation and uncertain progress in factor productivity.”

The trip notes suggest that, the main potential drivers of the Egyptian economy are in construction, low and medium-tech manufacturing, and the labour-intensive agricultural sector.

Consumer demand has been impacted, the report notes, but food expenditures remain relatively resilient, even though consumers are now more price sensitive and cutting non-essentials.

Inflation has peaked — and hit the middle-class particularly hard. Inflation has likely peaked in 3Q2017, BNP Paribas said, and has had “the greatest impact on mid and mid-upper income households given consumption patterns and the use of private healthcare and education services.”

On the macro level, BNP Paribas sees the risk of fiscal slippage as a result of upcoming presidential elections “is less likely. But that is to be confirmed in view of the upcoming social protection measures… The two main risks to fiscal consolidation are commodity price shocks (considered to be unlikely in the coming years) and execution risk of the next rounds of reform.” For the banking sector, Devaux writes that “a consolidation of the banking sector is needed as smaller banks are not viable in the long term. However, they are not under stress to force consolidation and their risk appetite remains limited.

The IMF expects the Egyptian economy to grow by 4.1% this year — and sees growth accelerating to 4.5% in FY 2017, according to its October 2017 World Economic Outlook released yesterday. Growth will be “supported by reforms aimed at correcting fiscal and external imbalances, restoring competitiveness, and creating jobs.”

Cooling inflation: The institution also sees consumer price inflation averaging 23.5% this year and then falling to 21.3% next year. Reuters reminds us that the IMF Mission Chief to Egypt Subir Lall expects inflation to drop to “slightly above” 10% next year.

Job creation in the cards: While the official unemployment rate stands at 11.9%, the IMF sees it falling from an estimated 12.2% this year to 11.5% in 2018

The IMF is also feeling bullish on the global economy after revising several of its economic forecasts… The report sees global growth accelerating from 3.6% this year to 3.7% in 2018, noting that “Broad-based upward revisions in the euro area, Japan, emerging Asia, emerging Europe, and Russia more than offset downward revisions for the United States and the United Kingdom.”

Emerging markets will turn in growth of 4.6% in 2017 and 4.9% next year. Closer to home, the IMF’s MENAAP region — which adds Afghanistan and Pakistan to MENA — will grow 2.6% this year and 3.4% in 2018. Hop to page 14 of chapter 1 for the full growth table (pdf).

Investment flows to emerging markets could suffer could suffer thanks to monetary policy shifts in developed economies. The report’s authors argue in this semi-annual update that “faster-than-expected monetary policy normalization in the United States could cause reversals in capital flows to emerging markets and an appreciation of the USD, imposing strains on economies with high leverage, balance sheet mismatches, or exchange rates pegged to the UDF.” This comes despite total non-resident capital inflows to EM having averaged USD 200 bn in each of the first two quarters of this year, up from a quarterly average of USD 120 bn in 2015-16.

Egypt is among the most vulnerable to rising global interest rates –Moody’s. Ratings agency Moody’s says Egypt joins Mongolia and Mozambique as holding the highest credit risk for exposure to rising interest rates in frontier markets “with these sovereigns demonstrating limited available fiscal and monetary space.” On the broader scale, frontier markets debt levels will remain elevated and they will continue to spend more on debt service in the next year. “The strength of institutions determines a sovereign's ability to counter negative shocks, such as a rise in global capital costs. In many FMs, weak institutions constrain their ability to buffer against shocks,” says Moody’s. The report also says that relying on foreign capital to fund current account deficits heightens the vulnerability of these sovereigns to capital outflows or lower inflows that can exacerbate difficulties in meeting current account and external debt payment obligations.

Did Aramco sign an agreement to refine fuel at MIDOR? Saudi Arabia may have given a boost to our regional energy hub ambitions, with Aramco reportedly having signed an agreement that will see it refine some of its crude through the Middle East Oil Refinery (MIDOR), sources tell Al Borsa. The agreement was signed by Aramco “weeks ago,” the sources said, adding that refined fuel will be sold to EGPC under an offtake agreement. Other refined products will be sold directly to Egyptian companies. Aramco will begin sending shipments as early as next month. The size of the contract is expected to be announced by the both countries’ oil ministers at some later date, they added. Aramco had agreed to a plan last month to ship crude through the SUMED pipeline and use Sidi Kerir as a center for exporting refined output to Europe. It was also considering using the storage capacity in Egypt.

MOVES- Alexandre Froment Curtil is set to take over as CEO of Vodafone Egypt starting 1 January 2018, according to an unconfirmed report in AMAY. Froment has been CEO of Vodafone in Hungary since September of last year, according to his LinkedIn page. Vodafone Egypt is presently led by Stefano Gastaut, who took over as CEO in September 2016.

MOVES- Ahmed El Sheikh, senior VP and GM of PepsiCo Egypt and Jordan, is taking over as CEO of PepsiCo India. El Sheikh will succeed D. Shivakumar, who stepped down to join Aditya Birla Group as president for corporate strategy and business development. El Sheikh will join PepsiCo India on 1 November, India’s Livemint notes.

Ride-hailing app Uber announced yesterday that it invested USD 20 mn in the new support center it inaugurated in Cairo, according to Reuters. Despite challenging economic conditions, Uber’s EMEA chief Pierre-Dimitri Gore-Coty said that “we’re here to stay and we’ll continue to invest to be able to serve citizens over here.” The center is the company’s first in the Middle East, according to an Investment Ministry statement. Uber is also in talks to launch a new bus service in Egypt.

Nasr signs EUR 320 mn-worth of agreements with Germany: Investment and International Cooperation Minister Sahar Nasr signed three agreements yesterday with Germany’s Economic Cooperation Minister Gerd Müller worth a total EUR 320 mn. The first agreement allocates EUR 225 mn to supporting economic and social reforms and is part of a broader EUR 450 mn package. EUR 45 mn will go towards projects in education, employment, energy efficiency, and infrastructure. German development bank KfW is providing EUR 50 mn to support SMEs. Müller also met with President Abdel Fatah El Sisi to discuss the G20 initiative for Africa and review different cooperation projects in Egypt.

Furthermore, it appears that Germany has also allocated USD 250 mn in its 2018 budget as part of a loan agreement to Egypt in 2016 to help close the financing gap, a key stipulation to receiving the IMF’s USD 12 bn Extended Fund Facility, German ambassador to Cairo Julius Georg Luy said in a press conference Monday, Ahram Online reports.

Presidential decree forms National Elections Commission: President Abdel Fattah El Sisi issued a decree Tuesday night greenlighting the formation of the National Elections Commission, according to Youm7. Commission head Lashin Ibrahim, the Court of Cassation’s second in-command, called for the board’s first meeting today. The president had signed off the National Elections Commission Act two months ago. The move signals that preparations for the 2018 elections are now in gear. No candidates have yet thrown their hats into the ring.

Gov’t to peg prices of harvested wheat to the global market: It would appear that under the new bread subsidy system the government will be pegging the price of wheat it purchases from farmers to the global market price, according to statements attributed to Agriculture Minister Abdel Moneim El Banna by Al Borsa. The move was naturally met with disdain, with members of the House of Representatives’ Agriculture Committee along with a number of grower’s associations have called on the government to raise the price it pays to farmer for a number of goods including wheat. Agriculture associations have been demanding that the government pay EGP 650 per ardib, up from EGP 565 during the previous harvest season. El Banna had said that pegging wheat prices to the global market would make it impossible to set a purchase until the harvest season begins in April.

Separately, the House Agriculture Committee is also pushing for the government to raise prices on sugar beets and sugarcane from farmers, calling for beets to be bought at EGP 700 per tonne and sugarcane be purchased at EGP 1000 per tonne. The government is considering the proposal, said El Banna.

Kobe Steel sells metal with false specs to several large firms, including Boeing and Toyota: Big corporate names including Boeing, Nissan and Toyota are rushing to make safety checks after Japan’s Kobe Steel revealed it sold metal with false strength certifications to over 200 companies, according to the FT (paywall).

UK closes investigation of exec at center of Qatar’s role in Barclays bailout. The United Kingdom’s Financial Conduct Authority (FCA) close an investigation into former Barclay’s executive Richard Boath “over a 2008 fundraising by the bank with Qatar,” despite the criminal charges against him, according to Bloomberg. The investigation revolves around a basket of agreements between Barclay’s and the Qatar Investment Authority.

The spat between the US and Turkey took another turn for the worst yesterday when the State Department defended its Ankara ambassador John Bass’ decision to suspend non-immigrant visa services for Turkish nationals, Bloomberg reports. The suspension came after a US consular staff member, a Turkish national, was arrested last week on suspected involvement in the 2016 coup against Turkish President Recep Tayyip Erdogan. Turkish authorities repaid the US in kind. The State Department maintains that it has found no evidence against the staffer.

Catalonian leader Carles Puigdemont decided yesterday to postpone an official declaration of independence, calling for more dialogue with the government in Madrid, the Financial Times reports (paywall). Puigdemont said he was ready to hold off for “a few weeks” until the two sides could come to “an agreed solution” following last week’s independence referendum.