Inflation is slowing down across MENA countries and should decelerate next year, according to a report by Capital Economics.
The economic research company reached this conclusion after PMI surveys for September revealed a fall in output prices components in the region.
Capital Economics noted the recent increase in inflation in the region was fuelled by transient factors such as rising food and energy prices.
It expects headline inflation to start decelerating in 2022-23 and the report said: “In Egypt this should open the door for rate cuts to come back onto the agenda.”
The new PMI data bring good news for the region as the non-oil sector rebounds in the Gulf countries in the short term.
The elimination of pandemic-related restrictions and strong vaccination programs will promote strong recoveries in the region, Capital Economics explained, pointing to Saudi Arabia and Qatar as evidence of strong vaccination programs allowing the recovery of domestic activities.
However, Egypt is still at risk as new waves of the coronavirus and domestic restrictions remain a possibility due to weak vaccination rollouts.