Egyptians are bracing themselves for price hikes, despite recent declines in food prices. These are to be expected as the removal of subsidies will increase prices of fuel throughout the country. As part of a plan to get Egypt through its economic reform program, Egypt plans to remove subsidies on most energy products, now sold to consumers for 85-90% of their international market price, by June 15.
While the program will raise prices for consumer it will reduce pressure on the Egyptian national budget and give authorities a chance to channel subsidy money to health care and education.
The energy subsidy cut, is part of a review of Cairo’s 3-year, $12 billion loan program. The subsidy removal will raise the prices of gasoline, diesel, kerosene and fuel oil. Going forward the government will begin linking the price of the less-popular 95 octane gasoline to international markets in April.
Inflation eased in June
Egyptian inflation eased unexpectedly to the lowest levels in the past 36-months according to CAPMAS, the Egyptian State-run statistic agency. The decline could provide a backdrop of lower interest rates. Consumer prices in urban parts of Egypt rose by an annual 9.4% in June, compared with 14.1% in May. On a monthly basis, food prices declined 2.2%. A rise in prices could increase the investing landscape in Egypt.