Harder times as food, gas prices spiral
CAIRO, 11 May 2011 (IRIN) - Abdel Moneim Ahmed was finally able to buy 10 loaves of subsidized bread after queuing for one-and-a-half hours with 30 people outside a bakery in the Egyptian capital, Cairo. Another woman, known only as Zeinab, said she had waited two hours. "You can see the problem for yourself," she told IRIN.
The scene playing out in this El Sayeda Zeinab neighbourhood symbolizes a much wider problem. For the past few weeks, Egypt, which imports half its food and subsidizes bread prices, has experienced severe shortages of this key staple.
Egyptians call it "aish", literally meaning life. The price is fixed at five piasters (less than one US cent per loaf), against 50 piasters per unsubsidized loaf. Economists say Egyptian families spend about 40 percent of their monthly income on food.
"The real reason for the current inflation is that governments, even the existing one, do not protect consumers from merchants' abuse," said Ahmed El-Naggar, head economist at Ahram Center for Political and Strategic Studies, and editor in chief of its annual publication, Strategic Economic Directions.
The Egyptian economy took a bashing from protests that swept across the country earlier this year, hurting tourism revenues and affecting trade. "This led to a six percent decrease in exports in January and February," said El-Naggar.
According to the Finance Ministry, urban consumer inflation rose to 11.5 percent in the 12 months to March, its highest level since April 2010, from 10.7 percent in February.
"We no longer buy beef and chicken," Samira Abuzaid, a 45-year-old housewife, said. "I tell my children that we need to adapt to a diet without these two items."
Another vital commodity that has become scarce and more expensive is cooking gas.
"Gas cylinders have suddenly disappeared," Emad Abul A'as said as he waited to buy a cylinder in the southern industrial city of Helwan. "If I do not get the cylinder from this centre, I will have to pay a lot for a cylinder outside."
Abul A'as, a 37-year-old cement factory worker and father of two, would have to pay six times the price of a subsidized gas cylinder elsewhere.
The government blames the situation in Libya and Gaza. Recently, Social Solidarity Minister Gouda Abdel Khaliq cited smuggling to Libya and Gaza as a reason for cylinder scarcity in Egypt, which imports 60 percent of its solid gas from Saudi Arabia and Algeria.
"Smugglers benefit from the difference in the price of the cylinders in Egypt," said Hossam Arafat, chairman of the petroleum section at the Federation of Commerce Chambers. "What makes this possible is that the government subsidizes the cylinders to the tune of 90 percent here."
Prices of other commodities have also risen dramatically in recent weeks. The prices of tomatoes, onions, green peppers, lemons, eggplants, potatoes, zucchini and beans have trebled, while items such as lentils are out of the reach of many.
"The future might be worse," said Rashad Abdou, an economics professor from Cairo University. "The prices might increase even more."
On 14 April, the World Bank said global food prices were 36 percent above their levels a year ago and remained volatile, driven in part by higher fuel costs connected to events in the Middle East and North Africa [ http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22888645~pag... ].
Another 10 percent increase in global prices could drive an additional 10 million people below the $1.25 poverty line, it added.
"More poor people are suffering and more people could become poor because of high and volatile food prices," said World Bank President Robert Zoellick. "We have to put food first and protect the poor and vulnerable who spend most of their money on food."
The government says it will try to bring down prices, according to Prime Minister Essam Sharaf in an address last week.
The deputy director at the at Ahram Center for Political and Strategic Studies, Abdel Fatah Al-Gibali, called for consumer protection, saying the supply of certain commodities had been monopolized by a small number of merchants, which affected the dynamics of the market.
"During the last period, or specifically since the start of the [protests] that toppled Mubarak, the society was not producing at all and the supply was less than the demand, [hence] an increase in prices," he added.