Egypt’s annual headline inflation rate declined to 4.6 percent in July (the lowest since November), down from 6 percent recorded in June, the Central Agency for Public Mobilisation and Statistics (CAPMAS) announced on Monday.

The annual inflation rate also dropped in cities to 4.2 percent in July, down from 5.6 percent in June, according to CAPMAS.

On the other hand, the monthly inflation rate saw an increase to record 0.2 percent in July, compared to a negative rate registered in June of -0.1 percent.

CAPMAS attributed the surge in the monthly inflation rate to the increase in energy and oil product prices by 11.2 percent, hotels services by 2.7 percent and services introduced at walk-in clinics by 1.5 percent, while vegetables prices witnessed a decrease by 1.8 percent, meat and poultry by 2.2 percent, fresh fruits by 3.7 percent, fish and sea food by 2.3 percent.

The new figures came under the limit that the Central Bank of Egypt has set by 9 percent (plus or minus) ahead of the expected meeting of the Monetary Policy Committee meeting, which is scheduled to be held on Thursday, to review the key interest rates.

Egypt’s inflation rate is projected to rise to 6.5 percent by the end of the current quarter, which ends in September, according to Trading Economics (TE).

TE expects the inflation rate to stand at 6.5 in 12 months’ time, while it is expected to jump to7.2 percent in 2021 and 7.5 percent in 2022, according to TE’s econometric models.

Egypt’s economy has been hit severely by the COVID-19 pandemic, affecting Egypt's external finances, GDP growth and fiscal performance, according to Fitch Ratings.

While maintaining Egypt’s long-term foreign-currency issuer Default Rating (IDR) at 'B+' with a stable outlook in July, Fitch projected real GDP growth to be 2.5 percent in FY2020/2021, well below the average growth of 5.5 percent in FY2017/2018 and FY2018/2019.

It also forecasted Egypt’s growth to recover to 5.5 percent in FY2021/2022 and to be maintained at just over 5 percent in the medium run, assuming tourism gradually returns, expecting further growth in the energy and manufacturing sectors and gradual improvements in the business environment.

Fitch expected improvements in the budget deficit, government debt and the current account balance in 2021-2022 as well.