Egypt's fuel price hike to trigger significant inflationary impact: Experts

Asmaa Mustafa,Sunday 5 Nov 2023

Egypt's recent decision to raise fuel prices is expected to have far-reaching consequences on inflation rates, according to economic experts who spoke to Ahram Online.

Egyptians are paying more for their fuel (photo: AFP)
Egyptians are paying more for their fuel (photo: AFP)


The Ministry of Petroleum announced on Friday that the cabinet is raising fuel prices for various octanes while keeping diesel prices unchanged.

Under the new pricing structure, the cost of 80-octane gasoline rose from EGP 8.75 to EGP 10 per litre, 92-octane gasoline increased from EGP 10.25 to EGP 11.50 per litre, and 95-octane gasoline climbed from EGP 11.50 to EGP 12.50 per litre.

However, diesel prices remained steady at EGP 8.25 per litre.

This marks the second fuel price adjustment in Egypt this year, following previous increases in March, with diesel prices also rising in May.

This move by the Egyptian government aims to address economic challenges and reduce subsidy burdens.

Banking expert Hany Aboul-Fotouh, speaking to Ahram Online, stated that the rise in fuel prices would impact inflation rates over the next three months, primarily due to increased transportation costs.

Aboul-Fotouh noted that the transportation sector represents around 10 percent of the consumer price index, and the consequent price increases of goods are expected to push the inflation rate up by an additional 0.5 to 1 percent within the next three months.

However, he believes that this expected rise in inflation is unlikely to influence the CBE's decision on interest rates at its next meeting on 21 December.

He emphasized that the bank's decision will prioritize the targeted economic growth rate, as raising interest rates can have a negative impact on growth.

The director of the International Centre for Economic Consultations and Economic Feasibility Studies Hoda Al-Mallah concurred that the fuel price hike would inevitably lead to an increase in the inflation rate.

Al-Mallah attributed the increase in local fuel prices to the recent surge in global oil prices and market fluctuations, partly influenced by Israel’s war on Gaza.

Unlike Aboul-Fotouh, she believes that the upcoming surge in inflation rates could impact the CBE's decision at its next meeting, although the exact outcome remains uncertain.

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