Monday,23 October, 2017
Current issue | Issue 1315, (13 -19 October 2016)
Monday,23 October, 2017
Issue 1315, (13 -19 October 2016)

Ahram Weekly

Reining in prices

A media campaign is aiming to contain prices before an impending devaluation of the currency, writes Nesma Nowar

Al-Ahram Weekly

People went to the shops this week with a smile on their faces as a result of the fact that they can buy some basic foodstuffs at a 20 per cent discount.

The discount comes as a result of the widespread response to a campaign initiated by TV host Amr Adib to offer food commodities at reduced prices for the coming three months in a bid to shore up Egyptian families strained by the rising costs of many goods. 

Adib called upon traders and the private sector to offer a 20 per cent discount on the sale of commodities in supermarkets and retailers across the country.  

“Don’t you want people to buy? Do you want stagnation,” Adib asked, addressing the private sector on his daily TV show on one of Egypt’s privately owned satellite channels. “We should all stand with one another,” he added.

Egyptians have been suffering recently from the soaring prices of consumer goods fueled by the devaluation in the Egyptian pound against the dollar and the recently introduced value added tax (VAT).  

Annual headline inflation dropped in September to 14.6 per cent, compared to 16.4 per cent in August, but rose from the one-digit inflation rate of 9.4 per cent in the same month last year, according to figures from the Central Agency for Public Mobilisation and Statistics (CAPMAS).

Vegetable prices increased by 18 per cent, and food and beverages prices rose by 15.3 per cent year-on-year, CAPMAS said.

Egypt, which depends on imports for everything from food to fuel, has been grappling with a foreign currency shortage after political instability in recent years strained its foreign currency earnings. The crisis became graver when tourism receipts fell sharply after the downing of a Russian airliner over Sinai last year.

At least 19 companies are participating in the current initiative, which Adib names “the people commands,” offering discounts on products ranging from 20 to 35 per cent for a period of one to three months. The products include oil, pasta, cheese, milk, juice and washing powder, among others. 

Ashraf Al-Gazayerli, head of the food industries chamber at the Federation of Egyptian Industries, said the discounted offers were for a limited period. “Everyone is participating according to their capacities, with no agreement on quantities or prices,” he said on Adib’s show last week. 

Among the participants are Juhayna Food Industries, the leading dairy and juice producer, offering its cheapest brand of milk, Bekhero, at LE3.85 instead of LE4.75 for a half kilogram pack.  

Regina Pasta for Food Industries is offering its low-tier pasta brand Star at LE1.9 instead of LE2.5, Al-Masreya pasta for LE2.9 instead of LE3.9, and its highest quality Regina pasta at LE10 instead of LE12.5.

Other companies participating include Arabian Food Industries (Domty), the Arma Group, Al-Rashidi Al-Mizan, the International Company for Agricultural Industry (Beyti), Great Foods, and Al-Bawadi, among others. 

Retail chains have scrambled to join the initiative, including Fathallah Market, Spinneys, Carrefour, Kazyon, Hyper One, Seoudi Market, Awlad Ragab, Alfa Market and Kheir Zaman, all of which have announced goods at discounted rates in branches across Egypt. 

The initiative also includes a number of government and Armed Forces run outlets to sell discounted products in governorates that do not have branches of the participating retailers. 

These include the governorates of Sohag, Qena, Al-Wadi Al-Gadid, Kafr Al-Sheikh and North Sinai.

Adib said on Sunday that 1,000 trucks had been sent to these governorates to sell the products participating in the initiative. But he also said this number was not enough and that the products had not reached people in Sinai and some parts of Aswan.

Eman Negm, an economist at Prime Holding, said the initiative appeared to have been very effective. She said it was part of a government plan to contain the prices of strategic goods following the expected devaluation, adding that the government had imported 400,000 tons of sugar and rice in a bid to contain prices.

Egypt is expected to devalue the pound over the coming days as it awaits the approval of the International Monetary Fund’s (IMF) executive board on a $12 billion loan facility. 

Analysts estimate the pound could lose anything between 35 to 45 per cent of its value, either in one go or in stages. The pound has already lost 14 per cent of its value against the dollar this year and is now officially trading at LE8.88 to the dollar.

President Abdel-Fattah Al-Sisi has directed the government to take measures to control the prices of commodities and to offer basic foodstuffs at suitable prices. “The food and beverages basket constitutes 40 per cent of the consumer price index, so this campaign could bring down inflation in the short term,” Negm told Al-Ahram Weekly. 

She said that the participating companies’ profitability would not be affected as a result of the campaign, as they were profiting from huge marketing. “No one is losing in this campaign,” she said. 

People are happy about the initiative but are concerned that it is only for a limited period of time. “We want a real solution to the problems, not just a painkiller,” said Mohamed Sami, a private-sector employee. 

Adib said the initiative was not a solution to the problem of rising prices, but it was an attempt to solve it. “We’re trying to do something to support people,” Adib said. 

The prices of goods are expected to soar following the devaluation, with the IMF expecting consumer prices in Egypt to rise by 18.2 per cent in 2017, the highest projected rate in the Middle East, North Africa, Afghanistan and Pakistan region.

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