Price hikes due to post-coronavirus inflation, not Ukraine war: Egypt’s supply minister

Mai Ghandour, Sunday 20 Mar 2022

Commodity prices have not been affected by the Russian-Ukrainian war yet, Minister of Supply and Internal Trade Ali Moselhi said on Saturday, emphasising that recent price hikes in the local market are due to post-coronavirus inflation.

Tawfiqiya shopping market in downtown Cairo. Ahram Online

As countries recover from the pandemic, the gradual increase in demand for basic commodities has led to inflation and an increase in prices, the minister explained.

Speaking to talk show host Amr Adeeb on the Al-Hekaya program, the minister reiterated that over the past three weeks nothing has been imported to the Egyptian market at higher-than-usual prices.

Thanks to Egypt's sufficient local reserves of strategic commodities, like wheat, the country has not been affected by shortages that have hit other countries.

This is despite the fact that Egypt, one of the world’s top wheat importers, receives around 80 percent of its wheat imports from Russia and Ukraine.

President Abdel-Fattah El-Sisi has made expanding Egypt’s strategic reserves of commodities a government priority in order to spare the country’s population the cost of the current global inflation.

Last week, on El-Sisi's directives, Egypt’s cabinet decided to grant wheat farmers an incentive of EGP 65 for each ardeb (1 ardeb is equivalent to 150kg) to encourage them to increase the quantities they sell to the supply ministry.

The ministry expects to receive nearly six million tonnes of homegrown wheat this year, up from nearly four million tonnes in 2021, after the wheat season starts in early April. The amount is expected to shore up the country's strategic reserves to cover nearly eight months, up from the current four months.

"If this strategic stock was not available, prices would have doubled and we would not be able to control them," Moselhi said, explaining that the average prices are now based on the existing quantity.

Moselhi has previously confirmed that his ministry would continue to provide meat in various outlets at pre-crisis prices. The ministry provides three types of high quality meat: Indian meat, which stands at EGP 55 per kilo; frozen Brazilian meat at EGP 85 per kilo; and Sudanese meat, which is locally slaughtered and priced at EGP 95 per kilo.

He pointed out that the Russian-Ukrainian crisis affected only three things: oil prices, grains exports (especially wheat) and most of all sunflower oil.  

The average prices of these commodities increased by five percent, 10 percent and 20 percent, respectively, "so we can say that the average is 10-20 percent," the minister said, noting that this comes despite the fact that he anticipates oil prices to keep on rising.

"And this does not actually resemble anything in relation to the increase that the war has made," the minister said.

The current stock of strategic commodities predates the Russian invasion of Ukraine. Thus, the price of commodities will also be based on pre-war levels, according to Moselhi.

Our strategic reserves have saved us from a real crisis, he explained, adding that prices are higher than usual as they have been gradually inching up during the pandemic.

In Ramadan, demand increases by almost double, and thus prices already soar during that month, Moselhi said.

Last week, Egypt’s Public Prosecution ordered the detention of 12 merchants over charges of hoarding commodities to take advantage of global inflation and the Ramadan shopping season — which is set to start in early April — to later hike prices.

This action was taken as part of the government’s broader efforts to tighten control on the local market to maintain price stability and secure the availability of goods amid global circumstances.

When supply is sufficient and has a reasonable price compared to the international prices, the demand is bound to increase, the minister assured. Thus, availability is not the problem.

Egypt formed a crisis committee to confront the impacts of the Russian-Ukrainian crisis similar to the one that was formed when the coronavirus pandemic hit the country in 2020, with the aim of ensuring that food prices remain stable ahead of Ramadan.

Competition makes merchants reduce the cost of the material, noting that there's a foreign proverb that says "do not change your standards of living, but rather change your supermarket."

The supply ministry is launching the Ahlan Ramadan initiative across all governorates, in addition to preparing Ramadan boxes and giving out coupons for food commodities for the neediest groups.

The ministry will also prepare 500,000 Ramadan bags in addition to distributing 800,000 kilograms of meat, 500,000 of which will be distributed during Ramadan.

In order to deter any attempts to manipulate prices, the government launched the We are All One initiative with the aim of offering products at a reduced price till the end of Ramadan, Moselhi said.

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