CAIRO: Minister of State for Economic Development Osman Mohamed Osman said on Wednesday inflation fell to 10.5 percent in the 12 months to May from 11.7 percent in the year to April, state news agency MENA said.

Osman said the consumer price index fell 0.1 percent in May 2007. In April it had risen 0.3 percent.

Prime Minister Ahmed Nazif said earlier this month that the government s target for inflation was 8 percent by July or August.

The government has been predicting a decline in inflation since the second half of 2006, and the central bank said last month that inflation may have peaked, citing a decline in the year to April 2007, the first in over a year.

Declining figures prompted the central bank to leave overnight corridor interest rates unchanged last month at 8.75 percent for deposits and 10.75 percent for lending to banks.