Inflation eased to 4.1% Y-o-Y from 4.2% Y-o-Y and was flat on a monthly basis in May, according to data released by the General Authority for Statistics. Food prices slowed to 0.3% Y-o-Y in May from 0.8% Y-o-Y. Housing and utility prices climbed 7.7% Y-o-Y in May from 7.5% Y-o-Y in April, while transport costs slowed to 11.3% Y-o-Y in May from 12.5% Y-o-Y in April. The numbers continue to show the absence of second-round effects from December's subsidy cuts as companies refrain to increase prices. Moreover, the stronger dollar is supporting a favourable inflation environment, especially on the food side, further restraining inflationary pressures. We maintain our forecast of average inflation forecast of 4.5% in 2016. (Bloomberg, Mohamed Abu Basha)