Egypt has set the price of bread sold outside the state’s subsidised food card system as its currency plummeted by more than 10 per cent against the US dollar on Monday.
The decision by Prime Minister Mustafa Madbouly followed a steep rise in the price of free-market bread over the past three weeks, which retailers attribute to higher wheat and energy prices on world markets following Russia’s invasion of Ukraine.
Monday's decision brings the price of almost every loaf sold in Egypt under state control. Sixty per cent of Egypt’s 102 million people depend on the bread available under the subsidised food card system, which sells at 0.05 pounds for a loaf.
The remainder of the population depends on the more expensive free-market bread.
Under the new pricing system, the price of a 45-gram, flat loaf is 0.50 pounds, and 0.75 pounds for a 65-gram loaf. The price of a 90-gram loaf was fixed at one pound. Packaged bread available in supermarkets and grocery stores is now priced at 11.5 pounds a kilogram.
In return for the compliance of bakery owners, the government will provide them with wheat at pre-Ukraine war prices, it said.
Bread is a staple for most Egyptians, who, signifying its importance, call it “eish”, which means life or livelihood.
With about 30 per cent of Egyptians living under the poverty line, subsidised bread is a main source of carbs for most Egyptians who eat it with almost every meal. The price of bread has long been a politically sensitive issue. In 1977, an attempt by president Anwar Sadat to raise its price sparked deadly riots that forced him to back down.
The Egyptian pound's significant depreciation on Monday followed weeks of pressure on the currency as foreign investors pulled out billions of dollars from its treasury markets after Russia's invasion of Ukraine.
The pound dropped to 17.42 to 17.52 against the dollar, after having traded at around 15.7 pounds to the dollar since November 2020. The fall in the pound's value against the dollar is likely to push up the price of a wide range of goods and services, compounding the economic woes of the country.
The Ukraine conflict has also hit the country's tourism industry because a significant number of visitors come from the two nations to the Red Sea coast.
Tourism revenue account for more than 10 per cent of Egypt's gross domestic product.
Underlining the gravity of its economic situation, Egypt has been in discussions with the International Monetary Fund about possible assistance. No formal request for assistance has yet been made.
The war in Ukraine has also left Egypt facing higher costs for its substantial wheat imports – 13 million tonnes in 2021 – since Russia and Ukraine account for 80 per cent of the country's imports.
Egypt last week imposed a three-month ban on the export of essential foodstuff, including wheat, in the hope that ample supplies would keep prices in check.
President Abdel Fattah El Sisi sought to reassure Egyptians as they struggle to make ends meet.
“What I would like to tell everyone is that we are fine and things are going well. We have the required essentials that can cover us for a suitable number of months,” he told a TV talk show on Sunday night.
“The efforts made by the government is the maximum that can be done, but even that is not enough.
“Our resources and revenue are absolutely not proportionate to our population ... Trust me, as long as our number is increasing the way it is, the problems we face will always be difficult.”
Egypt's population grows by nearly 2 million annually.
The Egyptian leader, meanwhile, made good on Monday on his promise for a relief package to cushion the most economically vulnerable Egyptians against the fallout from the Ukraine war. The package, worth 130 billion pounds, include tax breaks, salary and pension increases.