The Egyptian government may set official prices for fruit and vegetables because of the number of complaints the state’s ministry of supply has been receiving about price hikes.

According to state daily Al-Ahram on Monday, Minister of Supply Mohamed Abu-Shadi has given grocers nationwide a time-limit of a week to reduce prices, or he will set prices and allot them a profit margin of 25 percent.

Abu-Shadi was formerly a senior interior ministry official, responsible for investigating supply crimes.

"The profit margins of the fruits and vegetable retailers currently exceed 250 percent, which isn't fair and doesn't work even for mid-income Egyptians," Mahmoud Diab, the ministry spokesman told Ahram Online.

Grocers are not complying with the market's disciplinary rules, Diab said.

"For example, if you are dressed in a formal suit, you will get a kilogram (kg) of tomatoes for LE5, but if you send your doorman in his robe to buy some, he will get it for LE3.5 or LE3," Diab added.

Food prices soar

Food and beverage prices contribute the largest amount to Egypt's consumer price index (CPI), which recorded an average of 9.4 percent over the last ten years, a sign of continuous price rises.

Fruit and vegetables are not included among the subsidised foods that the government supplies to Egyptians through a ration card system.

Rationed food reaches around 69 million people out of a population of 90 million.

"The only way for the governmental authorities to stop traders’ manipulation is to revive mandatory pricing," Diab said.

Egypt saw government-imposed prices under the rule of the nationalist president Gamal Abdel-Nasser in the 1950s and 1960s. The system lasted until the early 1990s.

In 1977, president Anwar Sadat tried to lift governmental subsidies on food, causing price hikes. The resulting riots forced him to reverse the decision.

Gap in prices between wholesalers and retailers

Egypt’s retailers nationwide sell fruit and vegetables at average prices 300 times higher than the price at the two major wholesale markets located in Cairo and Giza.

Also, retailers’ prices differ from street vendors to groceries and from one district to another.

Green beans have been a cause for concern as retailers have tripled the price of a kilogram to LE12.

Tomatoes are sold at an average of LE3.5 per kilogram at retailers, while the same amount costs LE0.5 at the wholesale market.

Cucumbers and onions are sold at an average of LE4.5 per kilogram at retailers, while the prices ranges from LE1 to LE2.5 at the wholesalers.

Fruit-lovers are not safe from the trend of high prices. Apples and bananas are sold at an average price of LE12 per kilogram, while guavas and figs are sold at values of LE5 and LE6 a kilogram.

"These differences from street vendors to shops will make the implementing of the new system hard," Ibrahim El-Arabi, the head of Cairo Chamber of Commerce, told Ahram Online.

El-Arabi also pointed out that the government has yet to make clear whether imported fruits and vegetables would be subjected to governmental prices.

Inflation

"If the government was able to manage prices and supply at the same time, we won't see a harmful impact on inflation," said economist at Cairo-based investment bank EFG-Hermes Mohamed Abu Basha.

Abu Basha told Ahram Online that if the supply of fruit and vegetables does not meet popular demand, a black market will emerge.

"Investors might be anxious and will think before pumping their money into our local market when they see governmental interference by setting prices of goods," Abu Basha said.

Egypt’s annual urban headline inflation fell to 9.7 percent in the twelve months to August 2013, down from 10.3 percent, figures from the Central Agency for Statistics and Mobilisation (CAPMAS) showed earlier this month.

The overall inflation rate registered 10.9 percent in August.

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