Sunday,17 December, 2017
Current issue | Issue 1129, 3 - 9 January 2013
Sunday,17 December, 2017
Issue 1129, 3 - 9 January 2013

Ahram Weekly

Alert on prices

Mona El-Fiqi looks at how the depreciation of the pound is affecting production and prices for the end consumer

Al-Ahram Weekly

“The foodstuffs I used to buy for LE400 a month ago now cost LE700 for the same brands and the same quantities,” complains Omayma Ahmed, an employee. Like millions of other consumers, Ahmed is the victim of seemingly endless price hikes.
In the past, producers would not have dared to increase prices without a clear justification, but nowadays it seems that every time consumers visit the supermarket prices have increased.
Samar Salah, a housewife and the mother of three, complained that food producers were increasing prices without even announcing that they were doing so. “They are clever,” she said. “Sometimes they keep the price stable, but reduce the size of the package.”
She said that the prices of everything, including staples such as bread, pasta, tuna, milk and cooking oil, had been rising.
Meanwhile, the food producers say that they have had little choice but to raise prices in order to meet increases in costs and to keep production lines working. Many factors have led to rising prices over the past two years, they said, including the government’s decision to halt its energy subsidies to industrial firms and rising water prices.
The announcement of a new sales tax to be applied at the beginning of 2013 will also add to retail prices, they said, adding that the depreciation of the Egyptian pound on the currency markets would push prices higher because of the increasing cost of imported raw materials.
Sanaa Khalifa, an economist at the Agricultural Research Centre, said that she expected retail prices to increase on the back of the new sales tax, the higher prices of imported materials, and soaring energy prices.
Rising prices would mean greater levels of poverty, she said, pointing out that an estimated 25 per cent of the population was already living below the $2 per day poverty line and another 25 per cent was on the edge of doing so.
Some experts are worried that the price hikes could lead to a “hunger revolution” in the country, with Khalifa saying that whether or not this happened “depends on the decisions taken by the government. Good and clear decisions can still keep it from happening.”
Khalifa said that she expected consumer prices to continue to rise from between 10 to 15 per cent. “The more indispensable a product is for consumers, the more its price will increase,” she added.
One solution to curbing price rises, particularly of basic commodities, was cooperatives, she said, arguing that the government could use government-owned cooperative outlets to provide foodstuffs at reasonable prices.
The government could also expand the cooperative system to provide housing, education, and healthcare, she said, something that had been done in other countries, where it had helped establish prices for services that were midway between private-sector prices and public-sector ones, benefiting consumers.

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