The government will clamp down on traders who seek to manipulate the Russian-Ukrainian war to increase their profits, Prime Minister Mustafa Madbouli told a cabinet meeting on 3 March. “We are going to feel the pinch of negative economic effects, but the government is doing its best to mitigate these effects,” he said.
According to Madbouli, the megaprojects which the state is implementing have helped contain the ripple effect of international crises. He cited the construction of large numbers of silos which have allowed for a record stock of wheat to be stored.
“Just like we were able to absorb the shock of the coronavirus pandemic, we will be able to manage the current crisis and soften its impact on our economy,” said the prime minister.
Madbouli, together with the minister of supply and internal trade, has faced a deluge of complaints that merchants and bakeries are exploiting the Ukraine war to raise the prices of bread and other food products.
“Aware of the fact that Russia and Ukraine supply Egypt with at least a quarter of its wheat imports, merchants moved quickly to raise prices,” said MP Mahmoud Badr. While many bakeries have already increased the price of unsubsidised bread, Badr added that he had also received complaints that retailers were pushing up the price of sugar, rice, eggs, cooking oil, and chickens.
In a TV interview on Sunday, Mahmoud Attia, head of the Bakeries Division at the Cairo Chamber of Commerce, said the price of unsubsidised bread increased last week because flour sold by the government to bakeries increased by at least LE2,000 a ton to reach LE11,000, forcing bakeries to raise the price of a loaf by LE0.5.
MP Osama Al-Ashmouny warned that the situation could get worse as the holy month of Ramadan approaches, and MP Al-Sayed Al-Menoufi urged the government to create a mechanism that will allow citizens to report supermarkets and grocery stores which inflate the retail price of basic commodities.
“There must be coordination between the government and consumer protection groups to identify supermarkets that impose unjustifiable price increases,” he said.
MP Sherine Eleish told Madbouli on Sunday that she had received hundreds of complaints about sudden hikes in the prices of basic foodstuffs.
“The public feels that the government is doing nothing to control the retail market or confront greedy traders,” said Eleish.
The ministers of finance, supply and internal Trade, and petroleum, have all made statements on how rising international prices of wheat and oil could push inflation higher.
Finance Minister Mohamed Maait told Bloomberg Asharq on 6 March that increased international wheat prices could cost Egypt LE12-15 billion in the new fiscal year.
In a TV interview, Minister of Supply and Internal Trade Mohamed Moselhi noted that Egypt produced 3.5 million tons of wheat in 2021, but in 2022 was anticipating a harvest of 5.5 million tons, meaning the total volume of wheat imports was likely to fall.
The wheat harvest will begin next month. The construction of a national network of silos in recent years has, according to Moselhi, allowed Egypt to boost its strategic stock of wheat which now covers the country’s needs for four months. The wheat harvest season “will help meet our needs for another four months, or until November”, leaving ElMoselhi confident Egypt will not face any shortages before then.
Conceding that the price of flour had increased last week, Moselhi said this was necessary to cover the costs of production as a result of the government paying more to local growers to encourage them to cultivate more land with wheat.
“In the meantime, the government is committed to providing citizens with subsidised bread on ration cards, and this will create a balance in the local bread market, especially ahead of the holy month of Ramadan,” he said.
“We are committed to providing poorer citizens with subsidised goods, particularly bread,” said Moselhi. “This is why last week’s increase was confined to unsubsidised bread.
Moselhi also said citizens complaining of price hikes on basic commodities in supermarkets and retail outlets should report their concerns to the Ministry of Supply via its dedicated hotline.
MPs have warned that increased oil and wheat prices could see inflation in Egypt rise from the current 7.3 per cent to 12 per cent. MP Badr noted that the price of oil on the global market has increased from $67 to more than $120 in less than a year.
Maait said in a press interview on 4 March that Egypt currently imports more than 120 million barrels of crude oil a year, adding that the 2021-22 budget had been calculated on the basis of oil costing $60 a barrel.
On a brighter note, Petroleum Minister Tarek Al-Molla argued that the surge in natural gas prices in response to the Russia-Ukraine war would allow Egypt “to maximise natural gas exports to in part offset the increased cost of importing oil and petroleum products and wheat supplies”.
*A version of this article appears in print in the 10 March, 2022 edition of Al-Ahram Weekly.
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