2004 Honda City Knocking and high consumption

Hi,
My car is running on 90 octane since its purchase. I am first owner. For last 20000 KM the mileage has gone down to 7 KM per liter in the city driving. Plus it is knocking too much in the range of 1.5K rpm to around 2.3K and has no power in this range but if keep on pressing the pedal after a while it shoots when passed this range of rpm afterward and the knocking also gone.

I checked there is no EGR in this car but around the world this particular Honda City i. DSI has EGR next to oil filler cap same as Honda Jazz/fit/Aria. Though it has knock sensor. And interestingly no O2 sensor as well. I checked with various garages including Honda but there is no fault codes and engine light never comes but at when switched on and goes off after 2 seconds even before starter motor crank.

Please advise.

Regards,

Abdul Majid