Inflation rates drop again in June: Egypt's core inflation rose to 31.95% year-on-year in June from 30.57% in May, according to a statement by the CBE on Monday. The good news is that the monthly core inflation rate dropped to 0.8% in June from 1.99% in May. Annual headline consumer price inflation rose slightly in June to 29.8% from 29.7% in May, CAPMAS said on Monday. However, the monthly inflation rate in Egyptian cities eased to 0.8% in June from 1.7% in May.

This is the second drop in inflation rates after May since the EGP was floated back in November, with consumer goods seeing the slowest rise in prices since early 2016, according to HSBC MENA economist Razan Nasser. The slowdown also beat expectations of a rise in consumer prices during Ramadan. Pharos Holding’s Radwa El Sweify said that inflation in food, which has made up a marginal 0.3% of the inflation growth, usually rises in the months preceding Ramadan. She noted that the uptick in prices was more prominent on clothes and other items that have more to do with Eid.

Do not expect such results next month: Following the fuel price hikes late last month and the electricity price hikes last week, analysts are unanimous in expecting that the slowdown in inflation rates will not continue next month. The government had expected these measures will raise inflation rates 3-4.5%. "Invariably, most goods and services are impacted by energy costs ... be it in the form of energy input, transportation, feed stock,” Allen Sandeep, head of research at Naeem Brokeragetells Reuters. He expects headline inflation should rise above 35% starting in July. However, some of this could get offset if the EGP continues to strengthen.

Capital Economics takes a more optimistic note, arguing that the effects of the price hikes would not have as large an impact as expected, considering similar moves were taken last year to minimal impact. Capital Economics expects the resulting inflation to only climb 1.5%. BNP Paribas’ Pascal Devaux suggests that there are limited tools the government can take to stave off this inflation. He projects the fiscal year will end with an inflation reaching 25%.

Government much more optimistic on impact of fuel hikes: Egypt expects the monthly inflation rate to stabilize within four months at 1-1.25%, Finance Minister Amr El Garhy told Reuters on Monday. Vice Minister of Finance Mohamed Maait took it a step further and said that he expects the inflation rate to begin dropping again by August, according to Al Masry Al Youm. El Garhy tells Al Borsa that inflation is expected to drop to 16% by 4Q18. The CBE had said it was targeting lowering inflation to 13% by the end of next year.

Is the Oil Ministry reworking the timeline of its “Egypt as an energy hub” timeline? It appears that the Oil Ministry has set a ambitious target of turning Egypt into a regional energy hub by 2018, three years ahead of schedule. Oil Minister Tarek El Molla told EGPC workers it is necessary to complete the sector’s development before the end of 2018, in order to boost economic growth, Al Masry Al Youm reports. The statements come as we have seen a number of important developments come into fruition at this time. On the legislative front, Parliament passed Natural Gas act last week, with the executive regulations coming in September. Trial runs on SUMED’s LNG pier were announced on Sunday, while production on Eni’s Zohr field looks set to take off at the end of this year.

No metro price hikes until 2020: The prices of metro tickets will not be rising in 2018 despite the increases in fuel and energy prices, Transportation Minister Hisham Arafat tells Al Shorouk. He appears to refute statements he made last Saturday where he supposedly said that the pricing scheme will change in 4Q18. He added that prices will not change until 2020, when phase four of the Cairo Metro Line 3 is completed. He did repeat that the new pricing mechanism will be determined according to the distance traveled. This is standard protocol at this point for the Transportation Ministry to hint at price hikes, and then retract them when the populist masses cry out. We expect this show to happen over and over again before a sudden hike, as was the case with last March’s hikes.

In other metro news, the National Tunnels Authority (NTA) will sign a preliminary contract today for the Cairo Metro’s Line 6 with Canada’s Bombardier, according to Al Borsa. The line will be complete by 2022 and run parallel to Line 1, NTA spokesperson Hassan Tawfik said. Bombardier is expected to begin arranging project financing once the contracts are signed and the new line’s designs are set by the end of July. Around 65 train cars will be used to operate Line 6 but no details on the value of the contract have been given. The line is expected to service around 2 mn passengers per day.

The Ismail government has decided to continue banning rice exports during the coming period until local consumption is fulfilled, Supply Minister Ali El Moselhy announced yesterday, Al Shorouk reports. The government had reinstated the export ban last year, after flip-flopping on the policy a few times. Egypt had been banning rice exports on and off since 2008 — rightfully so, considering how we don’t need to export water.

El Moselhy also said the government “would allow market forces to determine rice prices” during the upcoming marketing season. The vague statement does signal that it may ease up on the ban next season. On a related note, the minister discussed ways to maintain market prices at EGP 6 per kg of rice with Federation of Egyptian Chambers of Commerce head Ahmed El Wakil, head of the Agricultural Export Council’s rice committee Mostafa El Naggary, and the Federation of Egyptian Industries’ cereals chamber’s rice division chairman Ragab Shehata. Shehata had previously said rice prices are not expected to rise, as there is sufficient domestic supply.

Toyota is planning to increase its investment in Egypt in the next five years, Toyota Egypt’s CEO Ahmed Monsef told Daily News Egypt at the launch ceremony of its new USD 8.5 mn Toyota Fortuner production line yesterday. “Egypt is a very important market to us. We plan to make it our regional hub in the coming five years,” he said, without specifying the scope or size of upcoming investments. We noted yesterday that the Arab American Vehicles Company (AAV) — a joint venture between Arab Organization for Industrialization (AOI) and Chrysler Group — will begin assembling Toyota Fortuner 2017 cars in Egypt. Local components make up 47.1% of total production input, AOI chief Abdel El Aziz Seif El Din, according to a statement (pdf). The facility is expected to have a production capacity of 2-3,000 cars per year, said AAV’s chairman Mohamed Anis. You better save up if you are interested as the model may retail at around EGP 1 mn, said Anis.

Hilton Hotels is also planning on expanding in Egypt with seven hotels in Cairo, Hurghada, and Ain Sokhna, in the next four years, Hilton MENA’s newly-appointed VP for Operations Mohab Ghali said, according to Al Shorouk. The company had decided to make Egypt the regional headquarters for the hotel chain, as it has been the centerpiece of its regional growth strategy, Ghali added.

MOVES- Memphis Pharma appointed Amal Abdelwahed as the company’s new managing director, effective yesterday, Al Borsa reports. Abdelwahed succeeds Osama Abdelsattar, who resigned from his positions as managing director and chairman of the company, Al Mal reports.

MOVES- Abdel Aziz Nosseir was appointed as the executive director of the CIB-affiliated Egyptian Banking Institute, and began his position at the beginning of June, Youm7 reports. The position was held in the past by current Planning Minister Hala El Said. Nosseir spent eight years at CIB, after which he taught business management at the American University in Cairo for 14 years.

Hear ye, all you proud parents of recent graduates, private universities’ tuition fees have been hiked by 10%, according to statements by Higher Education Minister Khaled Abdel Ghaffar yesterday. The fee increase applies to the 20 private universities in the country, including those established by foreign governments, Egypt Independent reports. Some universities, including the American University in Cairo (AUC) have already hiked their tuition fees. As of February, the university had more than doubled its fees in EGP terms after the November EGP float, leading its students to protest on campus.

Jumia is expecting e-commerce in Egypt to grow to USD 2.7 bn in 2020, according to Al Borsa. The number of Jumia customers who pay by cash decreased to 8% of total customers last year from 98% in 2012, CEO Hesham Safwat says. Market dynamics had played a crucial role in the emergence of e-commerce and its success in Egypt, as 65% of all online shoppers were below the age of 25. A report by PricewaterhouseCoopers, which we noted yesterday, had estimated that the number of online shoppers in the Middle East grew 6% between 2013-17, with around 29% of Middle East consumers now shopping online each month.

Seriously, Union of Egyptian Investors Associations. Slow your roll: The communists who bleed green at the Union of Egyptian Investors Associations are not happy with the foreign labor requirements in the executive regulations of new Investment Act, Youm7 reports. The organization’s head Mohamed Farid Khamis said that raising the limit on foreign labor employment for an investment project to 20% would open the door to corruption, adding that the requirement is unnecessary as Egypt’s labor is more than capable of meeting the demands of investment. Patriotic verver aside, what really got our blood up is their suggestion that passing the executive regulations requires their approval and that of other industry associations such as the Federation of Egyptian Industries. Instead, we propose that members of these associations, perhaps get into politics, join parliament and head up coalitions in...oh wait.

Carillion to exit Egypt, Qatar and Saudi: UK construction firm Carillion announced that it is exiting Egypt, Qatar, and Saudi Arabia in addition to exiting some UK partnerships, Reuters reports. Carillion said it would pull out of construction projects in these three countries after a decline in the oil price caused those countries to stall projects and stretch payments on key contracts. It added that it would only pursue jobs in that region in future “via lower-risk procurement routes,” according to the Financial Times. The firm, which also helps maintain British railways and roads, said payment problems on four construction contracts nearing or reaching completion had forced it take a provision of USD 1.1 bn. Carillion had also seen costs escalate on other projects, sometimes due to design changes, taking a particular hit on public partnership contracts with governments where prices are set ahead of time. The company’s CEO resigned on Monday, plummeting the value of the company’s stock.

Other EM exits worth noting this morning include Etisalat leaving Nigeria. The company, which is exiting its 45% stake in the company, terminated a management agreement with its Nigerian arm and gave the business time to phase out the Etisalat brand, Etisalat International’s CEO told Reuters on Monday. Nigerian regulators had tried last week to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a USD 1.2 bn loan failed.