Wednesday,22 November, 2017
Current issue | Issue 1347, (1 - 7 June 2017)
Wednesday,22 November, 2017
Issue 1347, (1 - 7 June 2017)

Ahram Weekly

Abstaining from spending?

Sherine Abdel-Razek reports on spending this Ramadan amid an unprecedented surge in prices

Ramadan expenses added to the sufferings of Egyptian families
Ramadan expenses added to the sufferings of Egyptian families

Last Ramadan, Soad, a retired teacher in her mid-60s, was saddened by the fact that she had to cut the quantities and the items she cooked for the first day of the holy month for the families of her three married daughters.

Last June, which coincided with Ramadan, Egypt’s inflation rate was 12.6 per cent. Last month, the rate jumped to its highest level in 30 years to hover around 32 per cent.

This year, the first day of the holy month passed without Soad’s 14-member family gathering. “I told them my health was not good and I could not organise the meal this year. But the truth is that I couldn’t afford it. It would have cost me at least LE1,000,” Soad said bitterly.

“Instead I gave each of them LE200 to help them buy what they need for Ramadan,” she added.

While Egyptians fast during the day in Ramadan, their demand for food increases during the month because of the meals held after sunset. Investment banks expect a rise in prices in Ramadan due to the increased demand for food.

Many people have been struggling to make ends meet since the floatation of the pound in November, stripping it of almost half its value. This came as part of a government reform package that includes tightening energy subsidies and introducing a new value-added tax (VAT). The package was a prerequisite to clinch a $12 billion loan deal with the IMF.

In a move meant to try to absorb the anger and frustration many people feel, the government on Monday revealed a social spending plan to support lower- and middle-income families. According to the plan, the government will allocate LE45 billion on income-tax reductions, bonuses for public employees, and increased pension payments and cash subsidies during the 2017/2018 fiscal year starting in July.

Also in the run-up to Ramadan it increased the allowances for food subsidies sold to ration cardholders during Ramadan by LE14 to LE35. The Ministry of Supply has organised “Welcome Ramadan” stores where it sells food items at a 25 per cent discount.  

Safiya, a 45-year-old cleaning lady, told Al-Ahram Weekly that despite the fact that subsidised commodities reach poorer neighbourhoods through military vehicles, many of them are snatched up by people with influence leaving few items for others.

“I wish they would distribute all the subsidised items on the ration cards, so that we all could have a fair chance of getting them,” she said.

Um Rabie, the caretaker of a building in Heliopolis, complained that even subsidised meat and poultry were unaffordable. “The government said it had lowered the prices of meat by LE9 in Ramadan, but this came after it increased the price of Sudanese and Brazilian meat from LE75 and LE48 to LE80 and LE69, respectively, before the holy month,” she explained.

While the week preceding Ramadan witnessed supermarkets packed with buyers, observers insist that these are members of the upper middle class and well-to-do strata. Those belonging to the lower middle class, the main purchasing force in society, have been reducing their consumption over the last six months, with Ramadan being no exception.

The decline in the sale of food is the best proof of this view. According to Pharos Brokerage, a financial firm, while the value of the first quarter sales for Juhayna, a dairy product and juice producer that has the highest market share, increased this year by 16.6 per cent, this stems from two successive increases in prices by 13 per cent in December followed by a further 10 per cent during February.

Prices are increasing by a greater percentage year-on-year, suggesting that volumes have dropped, Pharos commented.

“The decline in volume was anticipated, as the first quarter of 2017 was one of the toughest periods for consumer goods companies, given depleting purchasing power after the flotation,” it noted.

The reduced purchasing power has affected even charity in Ramadan. Ahmed Samir, an interior designer who used to distribute Ramadan bags (bags containing food items like sugar, rice and cooking oil) to the needy during Ramadan, told the Weekly that he had had to include fewer items and quantities this year.

“The bags cost me LE150 each last year and LE225 this year. I had to reduce what was in them so I could still give out the same number of bags to those in need,” he said.

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