Many families have been complaining about rising prices over the last three years. However, 2017 saw the highest leaps in the prices of goods and services in decades.
The inflation rate, which measures the rate of increases in prices, recorded its highest-ever level in 30 years in the middle of the year. According to official figures, inflation reached 33 per cent before starting to ease down in the last four months of the year. Meanwhile, in real terms, the prices of many goods doubled or even tripled.
The overheating prices came as a result of economic policies that include the introduction of tax rises, cuts in fuel subsidies and increases in electricity and water tariffs. More importantly, the reforms which qualified Egypt to get a $12 billion bailout loan from the IMF also included floating the pound last November, a move that resulted in the currency losing 50 per cent of its value.
Surprised by the increases in the cost of living, households manoeuvred to accommodate the hikes in their budgets. “I divided our monthly needs into two: a necessary list including items that must be bought, like my mother’s medicine, and other expenses like food, clothes and transportation. I then cut the second list in half,” said Shahira Amin, an employee in Cairo.
Amin excluded expensive food items from her list, and she did not buy new clothes or shoes during the whole of 2017. However, “my income still does not cover the now very expensive needs of my family, and I don’t know what else I can do,” she said.
Aliaa Sayed, a Cairo housewife, said her children’s school tuition fees, as well as private lessons, were given priority in her household budget. “For the first time in my life, I have been going to state-owned outlets that sell lower-quality goods at cheaper prices to save money for my children’s education,” she said.
The problem is double in nature, as while prices have been skyrocketing, salaries and wages, especially of employees in the private sector, have hardly increased. Public-sector employees have received an annual 10 per cent rise.
“I need double my income to buy the same products I used to buy last year before the floatation of the pound,” Siham Mahmoud, an employee at a private-sector company said.
The salary of Mahmoud and her husband increased by 10 per cent in 2017. She had to take her daughter off the school bus, and now she drives her daily to and from school. “It is a hassle and an added burden due to differences in school times and office hours, but I had no other choice,” she said.
Mohamed Abdel-Moneim, a public-sector employee whose basic salary after 17 years in the job still does not exceed LE1,500 a month, has had to look for an extra job in the evening. “I use my knowledge of computers to work in IT maintenance in order to make ends meet,” he said.
Abdel-Moneim added that problems were more serious for his colleagues who were not qualified to do the same thing.
Raafat Mohamed, an engineer in his mid-thirties who works in a private company, said he had abandoned the idea of getting married. “My salary, LE6,000 a month, will never be enough to cover the needs of a family even in the early years of marriage before having kids,” he said.
Raafat and many like him, all members of the middle class, blame the government for not adopting policies to help them cope with the repercussions of the austerity measures. He noted that private charities and some public allowances mainly target those belonging to lower-income categories of society.
Unable to downgrade the living standards the family used to have, Inas Samir, a housewife and the mother of two children and her husband, decided to sell a piece of land they owned to make ends meet.
Manal Mohamed, the mother of two children who lives in Nasr City, said that each month of 2017 had seen her family abandoning new items. “The list of forbidden things has been growing. It now includes all kinds of cheese except for white cheese, fast food and even school trips,” she said.
The forbidden list of Walaa Ahmed, a teacher, includes buying new clothes for her two children. “I used to buy two new pieces of clothing for each child at the beginning of the winter season, but this year I cannot afford it because the prices are too high. They had to wear last year’s clothes,” she said.
In addition to fuel and electricity increases, water bills also increased by 50 per cent. Internet services increased because the Ministry of Finance decided to apply the new 14 per cent value added tax (VAT) to them.
Ahmed complained that she had made great efforts to reduce her family’s needs to fit in with her budget, but then higher electricity and water bills had destroyed what she had done. She said it would have been better had the government postponed the move to cut subsidies to next year in order to lighten the burden on middle-class families.
Even school and university students have started to rationalise their expenses to cope with the rising prices of the treats they used to enjoy. Rana Hisham, a university student, said that although her father had raised her monthly allowance at the beginning of 2017, it still did not cover her expenses.
“I changed my mobile package and took a cheaper category, and I stopped buying food at the university, but the problem remains unsolved,” she said.
*This article was first published in Al-Ahram Weekly