Egyptian consumers say they are less likely to spend more, as their perceived income levels fall and they become more doubtful of the government's economic policies, according to a report from the government's official think tank.
The monthly report, published on Sunday by the cabinet's Information and Decision Support Centre (IDSC), shows that the Consumer Confidence Index (CCI) fell 0.7 percent to 106.6 points in March, as compared to the previous month.
The survey reveals that the decline is driven by a sharp drop in the index for families' income levels, down by 6.5 percent to record a mere 54.4 points.
This indicates that families perceive their income levels as declining and are less likely to purchase durable goods like home appliances and furniture in the near future, despite a 2.3 percent rise in average annual salaries to LE26,161 ($3,756) in the fiscal year 2012/13 .
Although urban inflation eased 0.7 percent in March as compared to February, it represented an annual rise of 9.8 percent. The last recorded unemployment figures for the year 2013 reached 13.4 percent of the labour force.
Another factor dragging down the CCI is consumers’ sentiment towards the government's economic policies. Consumer confidence in economic policies dropped 3.7 percent to register 86.4 points, which demonstrates their doubts that these policies will boost the economy, particularly their living standards.
Notably, the falling confidence comes amid government announcements concerning plans to support affordable housing and raise taxes on the rich by 5 percent for three years.
Last month, the cabinet passed a law preventing third parties from challenging contracts made between the government and investors, a move that officials said was meant to bolster investors' confidence in Egypt.
However, long term plans might not be able to compete with daily economic pressures, says an analyst.
"Talk of subsidy cuts and continuous blackouts are the reasons why people are sceptical of the government," Moheb Malak, an economist at Prime Holdings, told Ahram Online.
For the past three years, Egypt has suffered from fuel shortages and concerns over the subsidies' share of the state budget have been raised by officials and the media.
Participants in the survey expect their living standards as well as the general state of the Egyptian economy to improve, as evident in the 2.7 percent increase of the relevant index to register 179.1 points.
Egypt's presidential elections are scheduled to take place in late May, with former defence minister Abdel-Fattah El-Sisi competing against Nasserist politician Hamdeen Sabahi.
Egyptians are hopeful that political stability will attract more investments and thus open up more job opportunities, said Malak.
The unemployed were found to be increasingly pessimistic about the state of the economy, seen in the 8 percent fall in their CCI in March as compared to February, whereas the employed were able to muster more optimism, as their CCI increased 3.3 percent.