Annual headline urban consumer price inflation showed its first stable reading in December, following four successive months of acceleration, data released by CAPMAS showed. Inflation stabilised at 11.1% Y-o-Y in December, but remained at a five-month high. The outcome was above our forecast of 10.4% Y-o-Y largely due to smaller declines in fruits and vegetable prices than we expected.      Stable reading across the board in a quiet month: All annual inflation gauges showed a stable month, with both food and non-food inflation remaining stable in December at 14.7% and 8.0%, respectively. On a monthly basis, inflation was largely unchanged, showing only a 0.1% decline in general prices. Food prices recorded a retreat of 0.3% M-o-M, driven by a 0.9% M-o-M decline in vegetable prices, which was a key driver of inflation in 2H2015.   Inflation outlook to hover around 10%; uncertainty remains around fiscal agenda: The released inflation number means inflation averaged 10.4% Y-o-Y in 2015, a slight rise from 10.1% Y-o-Y in 2014. We expect inflation to continue to hover around the 10%-mark in 2016 too, driven by a weaker EGP, as well as a short supply of USD, which is increasing transaction costs, in addition to potential fiscal measures. The timing of the latter remains uncertain, with the implementation of the value-added tax (VAT) now left to the newly-elected Parliament to decide upon. The government is also set to enact the third annual electricity price hike in July 2016; however, we do not expect a hike in fuel prices at the pump as the government takes advantage of depressed oil prices.   Numbers point to stable policy rates in the short term: In the absence of new inflationary pressures in the short-term, we expect the Central Bank of Egypt to keep policy rates unchanged at its next meeting (date of which is yet to be announced) having increased them by 50 basis points in December. We, nevertheless, maintain our view of a risk of another 50 bps policy rate hike in 2016, the timing of which remains dependent on the timetable of a potential EGP devaluation and VAT implementation. (CAPMAS, Mohamed Abu Basha)