A significant rise in commodity prices and an absence of government oversight

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The price of many basic commodities in Egypt have significantly increased, sometimes up to 50 per cent, in the absence of serious oversight that the government pledged to activate to prevent major traders from exploiting the crisis brought about by the Russian invasion of Ukraine.

At the top of the list of commodities are flour, tourists, unsubsidised bread, rice, corn, vegetable oils, beans and potatoes.

Record price hikes

Unsubsidised bakeries have increased the price of bread by 50 per cent. A loaf that once sold for 50 piasters became 75 piasters, and a large loaf increased from EGP 1.5. This was reflected in restaurants, which raised the price of beans and falafel sandwiches by 50 piasters, and potatoes, eggs and other sandwiches by EGP 1. The Bakeries Division of the Federation of Chambers of Commerce in Cairo justified this rise in prices by the increase in wheat prices globally, as a tonne of flour rose from EGP 9,500 to 12,000, but at the same time it confirmed that some importers and traders took advantage of the Russian-Ukrainian crisis to increase prices more than they had to, amid lack of government oversight.

Attia Hammad, head of the Bakeries Division in the Cairo Chamber of Commerce, demanded to stop the export of flour to counter the rise in prices, to subject the flour exchange to supply control, and to provide awareness programmes for bakery owners to prevent the exploitation of the crisis, with the need for everyone to unite to prevent the monopoly of flour and the increase in the price of bread.

On the other hand, maize prices increased by 25 per cent as the price of a tonne jumped from EGP 5,600 to EGP 7,000 at the beginning of this week, because of the war between Russia and Ukraine, which produces one-fifth of the world’s corn production. It is expected that the rise in the price of corn will lead to a rise in the price of chicken, red meat, eggs and dairy, which is already happening, as it is the backbone of the protein industry in Egypt, as it is the main component of feed for poultry and livestock. Ten million tonnes of corn are imported annually.

After the Russian invasion of Ukraine, the government’s attention turned to wheat, stressing that Egypt has enough stocks for four months, but it ignored corn, of which the government does not have any stock because it is not a supply commodity, and therefore the markets will be subject to very large fluctuations during the coming weeks as Ramadan is approaching, in which the consumption of white and red meat, eggs and dairy increases. Amid the absence of government oversight, rice traders raised the selling prices of broad grain rice (baladi) to EGP 6,500 per tonne instead of EGP 6,000, and fine-grained rice to EGP 6,300 per tonne instead of EGP 5,300. The Rice Division of the Chamber of Grain Industry in the Federation of Egyptian Industries attributed the rise in prices to the Russian-Ukrainian crisis, which is a flimsy argument as the local production of rice covers about 80 per cent of the state’s needs.

According to press reports, the rise in rice prices came as a result of traders controlling most of the local production last season, and storing them in conjunction with the rise in global grain prices as a result of the war, taking advantage of the crisis. Meanwhile, the government is failing to fulfill its duty and to prevent a monopoly and unjustified price hikes. The price of vegetable oils increased by about 15 per cent, at a time when Egypt imports more than 87 per cent of its consumption of oils from abroad, with different production stages, ranging from importing seeds, pressing and refining them, or importing and refining oils, or being satisfied with the filling stage only.

Citizens are struggling under the load of high prices

The rise in prices has become a preoccupation in Egyptian homes, cafés, means of transportation, and public and private conversations on social media platforms, as complaints about high prices and the inability to meet basic needs are rising, at a time when about 30 million citizens live below the poverty line, according to official figures. Even the middle class are talking about reducing expenditures in order to face this large increase in prices, which will continue for a while, especially in light of the government’s intention not to do anything about it.

According to experts, inflation will rise this year to about nine per cent at least, after it reached 5.8 per cent last year. If the state intervenes to curb inflation by stabilising diesel prices and reversing plans to reduce spending on food support in general, any modification in these factors probably means that the average inflation rate is higher than that. The state also needs to impose strict controls on traders and importers who monopolise goods – some of which are local goods – and store them in order to manipulate and increase their prices to achieve material gains for them, at a time when ordinary citizens are struggling.