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Egypt food prices inch down, but is it enough? - Daily News Egypt

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Egypt food prices inch down, but is it enough?

CAIRO: After more than a year of hardship, food vendors around Cairo are just now beginning to breath a sigh of relief as they see sky-high food prices receding. Many warn, though, that the effects on the street level have not been as dramatic as statistics may suggest. A survey of vendors in different sectors …


CAIRO: After more than a year of hardship, food vendors around Cairo are just now beginning to breath a sigh of relief as they see sky-high food prices receding.

Many warn, though, that the effects on the street level have not been as dramatic as statistics may suggest.

A survey of vendors in different sectors indicated that food prices had come off their high but were still in bad considering the broader context of food prices.

Mahmoud Abdel Hadd runs a fruit and vegetable shop. Just a couple of months ago, he was driven to the point of desperation because produce prices at the Obour market, one of Cairo’s largest, had grown nearly out of reach for the small business owner.

“A couple of months ago, prices were high so I couldn’t buy the goods I needed, he said.

Abdel Hadd said that at their highest, produce prices meant that people weren’t buying. Business came nearly to a standstill.

Today, though, some of the pressure has been released, he said. Cucumber and zucchini prices are down significantly. Fruit prices have started to slide. Tomatoes cost today LE 2.5 per kilo as opposed to LE 4 several months ago. And now the customers are coming back.

“Everything was reaching a peak [late last year], including tomatoes and potatoes which are usually the cheapest, but now prices are coming down a bit, he said.

But, as Abdel Hadd describes it, the current economic crisis has given consumers a whole other reason to save, rather than spend. Low prices, he lamented, have been replaced by consumer worry.

Abdel Hadd has the numbers to back up his assertions about the recent decline of food prices.

Chatham House, a London-based think tank, in its December report “Feeding the Nine Billion, noted that global food prices actually hit a high in March 2008 but didn’t begin declining until the fall.

Food prices in December, says the report, are back down to mid-2007 levels thanks in part to the decline in the price of oil and to the global economic woes.

Despite the decline in prices, most vendors who spoke with Daily News Egypt indicated that prices had been falling, in some cases sharply, but beginning really only with the start of the new year.

“Throughout the country, said Metro supermarket branch manager Wael Nabil, “prices have been coming down in the last month.

Metro sets its prices at the corporate level and employees confirm that many items, including produce and cooking oil, have slid dramatically from their highs over the last month.

Increased sales of certain food items, argue some store owners, indicate food prices that, though off their high, are still out of reach of many at the street level.

Hany Hassan owns a bakery that, as it was yesterday, is always jammed with people. When asked whether this was a sign that food prices were coming back into reach for many people, Hassan dismissed the idea.

“People will always buy bread, he said, adding that bread sales can be among at their best when other foods become too expensive.

Hagg Sayid, who runs a falafel store, said that his fuul has never sold better.

He noted that fuul served as a low-end food staple, affordable to nearly all ranks of the population.

Hassan noted that despite his bakery’s success, his neighboring convenience store had fared less well despite declining food prices.

When asked whether the sliding prices had allowed him to reconstitute any of his business, Hassan tried to put them in broader context. He noted that a liter of milk cost LE 5.5 now as opposed to LE 2.5 four years ago. Oil cost LE 4.5 four years ago and LE 10 now.

Despite the less than optimistic commentary at the street level, many indicators are pointing in the right direction. When figures are released experts expect January to mark the fifth straight month of inflationary decrease.

Urban inflation fell to 18.3 percent in December of last year, down from 20.3 percent the previous month.

A decrease in inflation, in this case, is likely not a driver of food prices but rather reflective of a decline in those prices.

Food prices will likely face a challenge this month when, experts predict, the Central Bank will cut interest rates in an effort to stimulate the ailing economy. If overdone, rate decreases might create inflationary pressure and threaten food prices.

Overshadowing all the pressures on food prices is the government’s food subsidy program, which is the single greatest mover of food prices.

With the outbreak of the economic crisis, the government postponed plans to scale back its subsidies and to date has not indicated when it will resume them. Those watching the various food industries should keep an eye on the government’s subsidy plans.

Though the indicators have been there for months, it is only recently that the street level is reporting a bit of relief from the grueling food prices of 2008.

And though prices may be off their all time high, many are quick to comment about how far they might still be able to fall.

Topics: FJP

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https://www.dailynewsegypt.com/2009/02/01/egypt-food-prices-inch-down-but-is-it-enough/
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