Bread prices down

Amira Hisham , Tuesday 23 Apr 2024

The price of bread is falling thanks to government moves and global and local factors, reports Amira Hisham

Bread prices down

 

Since last year, Cairo resident Haj Hamdi has had to earmark ever larger sums from his daily budget to pay for bread.

He used to pay around LE10 for 10 loaves of baladi bread per day, but prices gradually increased until just before Ramadan they jumped, and he was forced to dish out LE30 to cover his family’s daily consumption of bread.

Hamdi is one of 40 million Egyptians who buy unsubsidised bread, while some 67 million others purchase the subsidised staple using their ration cards. This week, Hamdi could not contain his excitement when he found that bread prices had dropped by around 30 per cent thanks to government moves.

Prime Minister Mustafa Madbouli had instructed the Ministry of Supply to look into cutting the prices of unsubsidised bread after the Eid Al-Fitr holiday, especially since global flour prices have dropped.

Minister of Supply Ali Moselhi met with the head of the Bakeries Division, the head of the Cairo Bakeries Division, the head of the Grain Chamber, the heads of the Cairo, Giza, and Qalioubiya directorates, and representatives of bakeries that sell unsubsidised bread.

He pointed out that the price of flour had dropped from LE28 to LE18 per kg, marking a 35 per cent decrease. The cheaper flour is available thanks to the resolution of the dollar shortage and the release of merchandise held up in the ports owing to hard-currency shortages.

New prices and weights for unsubsidised bread were put in place, with the Ministry of Supply put in charge of supervising the market to ensure bakeries commit to the agreed prices.

“This is a rare occurrence,” said Khaled Fekri, secretary of the Cairo Bakeries Division at the Federation of Chambers of Commerce, commenting on the drop in prices.

In January this year, the price of the dollar went up on the parallel market, leading to an increase in the price of flour used by privately owned bakeries, Fekri said. Due to shortages of hard currency in the official banking system, traders were sourcing dollars for their imports through the parallel market.

Following the liberalisation of the exchange rate on 6 March, the value of the dollar settled at around LE50, still less than the parallel-market rate. The banks began meeting the demand for dollars to pay for imports, and global wheat prices decreased.

The state intervened to regulate bread prices by implementing a standardised price list based on weight and resulting in a 30 per cent reduction in the price of a loaf of bread.

Hussein Boudi, president of the Mill Owners Association and vice president of the Chamber of Grain Industries, told Al-Ahram Weekly that global wheat prices had soared to $300 per ton before dropping to $230.

This reduction has lowered flour prices, and this along with the impact of the exchange-rate liberalisation and the greater availability of dollars, has facilitated wheat imports.

The price of a ton of flour before Eid Al-Fitr ranged between LE21,000 and LE22,000, said Hassanein, noting that at the meeting with Moselhi it was agreed to cap the price of flour at LE16,000 per ton.

Fekri said that violations of the new pricing mechanism would result in legal repercussions for bakery owners. He added that the Ministry of Supply has simplified the licensing of unregistered bakeries, adding that about 80 per cent of bakeries selling unsubisidised bread are operating without a licence.

A committee has been tasked with following up on the private bakeries’ commitment to the new weights and prices, according to ministerial decree 69/2024. Bread prices will be reviewed every three months or when the need arises. The committee is also tasked with announcing the maximum sales prices for consumers and for licensing bakeries.

Ministerial decree 15/2024 mandates that bakeries selling unsubsidised bread display clear weight and price information to consumers.


* A version of this article appears in print in the 25 April, 2024 edition of Al-Ahram Weekly

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