CAIRO: Reports that the prices of sugar, rice and wheat have dropped swirled in the local press yesterday, following a number of state efforts to keep food costs down during the month of Ramadan.
According to analysts, the price declines should somewhat ease the record-setting inflation here, though prices in general remain high and are in many cases rising even faster due to Ramadan demand.
Inflation will stay high, likely ending the year at between 20 and 21 percent, at an annual average of 18 percent, investment bank Beltone Financial wrote in a statement Wednesday.
While we expect domestic prices for some of the basic staples might have declined in August in response to government measures, including increasing the supply of subsidized goods and the ban on rice exports, we believe that prices are still generally high, the report read.
Increased purchases during the holy month have driven up the prices of fruits, vegetables, eggs and poultry, according to local reports. The Chambers of Commerce Federation recently estimated that food has become more expensive by 80 to 160 percent.
For one, poultry prices should come down soon, according to Mohamed El Shafei, vice chairman of the Poultry Council in Egypt. Chicken is expensive now because of high demand and high costs – don t forget – for everything, Shafei said, including the price of feed, which is usually corn and beans.
After one week, there will be more chicken in the market, El Shafei said, and prices will decline to about LE 10 per kilogram (kg), where they were before Ramadan. Poultry now sells for about LE 11 per kg.
The poultry situation is now more stable than before, he said.
The state has considered importing chickens to cool prices, Shafei said. But it would be a great mistake for them. They would lose a lot of money.
Although chicken is pricey in Egypt, it is even costlier in potential import markets – like Brazil and the United States – where demand is still strong, but labor and transport cost even more, El Shafei said.
Many Egyptians also prefer to eat local poultry because it is easier to ensure that it is fresh and made in compliance with Islamic halal standards, he added.
From January to April this year, the price of poultry jumped from LE 6 per kg to LE 10.75, according to El Shafei.
Until recently, Egypt had produced about 2 million chicken broilers per day, with each bird weighing between 1.7 to 2 kilograms, El Shafei said. While they are now making only about 1.7 million, the difference should be recovered in a couple of months.
In July, the Minister of Trade and Industry said he would remove the sales tax on some of the items used to make dairy, poultry, meat and rice, but no further announcements have followed.
Widespread inflation – especially when it comes to foodstuffs – has proved worrisome for the state, as it threatens to slow real economic growth by hampering domestic consumption, and has already sparked anti-government grumbling. The worst case of discontent came in April, when three strikers were killed in clashes with police in Mahalla El-Kobra.
More than 40 percent of Egyptians live under the poverty level, $2 a day or less, meaning even minor increases can have a big effect on the poorest Egyptians.