Prices to go down

Safeya Mounir , Tuesday 10 Oct 2023

The government has launched an initiative to cut the prices of certain basic food items to help people struggling with inflation, reports Safeya Mounir

Several locally produced goods will see price cuts next week
Several locally produced goods will see price cuts next week

 

Starting on Saturday, Egypt will see the prices of nine essential food items go down by 15 to 25 per cent, said Alaa Ezz, secretary-general of the Federation of Egyptian Chambers of Commerce, in an interview with Al-Ahram Weekly.

On Monday, Prime Minister Mustafa Madbouli announced the details of an initiative to decrease the prices of staple food items that have recently soared, with price tags stuck on the products to avoid any later manipulation by merchants.

“We will work on providing different food products and to decrease their prices. And we will coordinate with the Central Bank of Egypt [CBE] to make available the needed dollars towards this,” said Madbouli at a cabinet meeting.

The nine items that will see price reductions are fava beans, lentils, pasta, cooking oil, sugar, rice, white cheese, poultry, and eggs. The prices of the latter two items will go down by up to 15 per cent.

Madbouli said that state bodies are coordinating to apply the initiative, including the Ministry of Finance, represented by the tax and customs authorities, the Ministry of Trade and Industry, the General Organisation for Export and Import Control, the Ministries of Supply and Agriculture, and the CBE. 

The latter body will speed up and facilitate procedures, he added.

Mohamed Attia Al-Fayoumi, secretary of the Federation of Egyptian Chambers of Commerce and head of the Qalioubiya Chamber, pointed out that many of the goods are either imported or contain imported components, forcing merchants to buy dollars from the black market to import them.

He noted that Madbouli had said the CBE will work on securing dollars for these imported components.

Al-Fayoumi expects that prices could decrease by 30 per cent. He told the press that the reduction in prices hinged on ensuring a substantial supply of goods, preventing monopolies, and fostering healthy competition.

For merchants, rapid turnover of stock is also in their best interest, he said. Selling a larger quantity of goods at a lower price is preferable to stockpiling.

Al-Fayoumi noted that the prices of certain commodities have started to decline and said he expected them to return to their previous levels in the near future. Some vegetables and fruit have seen notable decreases in prices, and sugar prices have already dropped by LE600 per ton.

He added that food factories have agreed to reduce their profits by eight to 10 per cent and anticipated that the prices of many goods, whether produced locally or partially imported, will decrease by around 20 to 25 per cent. 

Many locally produced goods have seen significant price increases in recent weeks. Sugar prices have hiked by 160 per cent over the past year, reaching LE40 in some stores. Rice prices have also surged.

The high price of sugar is partly due to some factories undergoing renovations or replacements of spare parts, incurring additional costs in dollars. This has led to the consumer shouldering these expenses, which are added to the price of the final products, Al-Fayoumi noted.

Eman Maree, a consumer, health, and industrial sector analyst at Arab African International Securities, believes that any decline in prices will depend on the availability of the dollar for companies producing foodstuffs.

 It will also rely on an increased preference for local products as alternatives to imports, which may positively impact current inflation rates.

She said that reducing prices would rely on stabilising the value of the dollar against the pound, promoting local manufacturing to reduce imports, and expanding agricultural areas to decrease the reliance on imports, all of which can help to lower the inflation rate.

Inflation continues to rise due to various factors, including local currency devaluations and a shortage of dollars and raw materials. 

The government has implemented measures to curb price increases for certain commodities such as sugar and onions by banning their export to mitigate price spikes in the market.


* A version of this article appears in print in the 12 October, 2023 edition of Al-Ahram Weekly

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