Egypt grapples with sky-rocketing prices, fears of worsening grow

ByHisham Allam

Egypt grapples with sky-rocketing prices, fears of worsening grow

Soaring prices in Egypt, fueled by currency devaluation and global disruptions, are posing significant challenges for Egypt, whose poverty level already stood at one-third of the population in 2020. Government efforts to alleviate the situation by offering subsidized products are being overshadowed by broader economic issues, with experts noting that the country stands little chance of meeting its commitment to end poverty by 2027.

The recent devaluation of the Egyptian pound, driven by a shortage of foreign currency aggravated by the war in Ukraine, has caused the dollar to rise sharply, exceeding 65 Egyptian pounds on the black market and it is practically unavailable in banks. This has disrupted supply chains, leading to price hikes for various goods, including essential food items like meat, sugar, oil, rice, and legumes. Meat prices, for instance, have surged by 30% in just two weeks, adding to a 70% increase over the last six months.

Jihan Salama, employed at a government university, exemplifies the challenges that are being endured by numerous Egyptians amidst the persistent food crisis. Over the past two months, acquiring essential items has transformed into a daily ordeal. The quest for a lone bag of sugar entails lengthy queues at government-subsidized outlets with families restricted to just two bags each. Buying sugar at general stores without subsidies is no longer feasible as it remains unavailable.

Bread prices have surged while product size has diminished. Similar trends are evident in meat, chicken, eggs, and dairy products. Even traditionally affordable staples like legumes have seen prices double. “Our income hasn’t matched the escalating costs,” lamented Jihan, noting the necessity to scale back on crucial items such as meat and dairy. In response, she has turned to purchasing lower-quality alternatives like rice, flour, and oil, putting a further strain on her family’s dietary health.

According to data from Egypt’s Central Agency for Public Mobilization and Statistics, the price of food rose by 47.9% in January 2024 compared to the same month in the previous year. From 2010 to 2024, the average food inflation rate in Egypt stands at 17.81%.

Economic expert Mohamed Fouad noted,

“Egypt ranked among the top three globally in real food inflation over the past nine months, as per the World Bank’s Food Security Update released in February 2024. It stood third, following Argentina and Zimbabwe. This elevated level of food inflation significantly burdened impoverished households, whose disposable income faced these inflationary pressures, leading to considerable financial strain.”

According to Fouad, the state’s social safety net was deemed “inadequate” and “inefficient” as it failed to reach more than 10% of the population.

Adding to this grim picture is the poverty level which was already high in 2020 when it stood at about 32% of the country’s over 109 million people. The ongoing economic crisis seems to have lowered optimistic poverty projections which had tentatively put the level at nearly 27% in 2023.

Economic expert Ahmed Khattab noted that at the end of January, the Egyptian government announced a plan to rationalize investment spending by public budget entities by 15% until the end of the current fiscal year 2023/2024. He also told DevelopmentAid that Egypt’s economic reform measures instilled confidence in the IMF, potentially encouraging other countries to increase investments.

To mitigate the worsening of the crisis, Khattab stated that the government has stopped several development projects that are reliant on foreign currency, implemented programs to support low-income and social security, announced a substantial social allowance, and raised the minimum wage ceiling to match inflation rates and rising prices.

See also: The human cost of inflation in Egypt

Nevertheless, experts noted that, despite the efforts being made, the current situation casts doubts on Egypt’s ability to meet its commitment to end poverty and hunger by 2027.