The UN Food and Agriculture Organisation's (FAO) March food price index, a monthly measure of changes in the international prices of a basket of basic foodstuffs, indicated that average food prices in February 2013 had not changed from January. Since November, the index has been moving within a narrow range, with increases in the prices of dairy products and oils and fats being largely balanced by declines in the prices of cereals and sugar. Meat prices were generally stable over the period. For decades, the prices of food commodities in Egyptian markets have been affected by the rise or fall of international prices as Egypt imports nearly 60 per cent of its food. However, local food and beverage prices seem to have possessed minds of their own over the past few months, pushed by a depreciating pound and supply bottlenecks due to fuel shortages and insecurity. As a result, the prices of many food items, such as milk, cooking oil and chicken, have increased by around 30 per cent. The soaring prices have been reflected in the official inflation rate, with the Central Agency for Public Mobilisation and Statistics (CAPMAS) saying that the annual consumer inflation rate had shot up to 8.7 per cent year-on-year in February, up from 6.6 per cent in January and its highest level since September 2010. Month-on-month inflation stood at 2.8 per cent in February, and food price inflation reached 9.7 per cent year-on-year in February and 2.9 per cent month-on-month. Experts attribute the increasing domestic prices to multiple reasons. According to Omniya Helmi, a professor of economics at Cairo University, production costs are increasing because manufacturers have to pay higher energy prices, and the depreciation of the pound has also led to higher inflation. Before the 25 January Revolution, the exchange rate of the Egyptian pound against the dollar was LE5.8. It now stands at LE6.8, leading to increasing prices of imported products, including those used in food manufacturing. “Egypt depends on imports for more than half of its total food consumption. It is time we worked on restructuring our production and changing it to depend more on local products,” Helmi said, suggesting that more fish could be taken from the Nile and from the Mediterranean and Red Seas to meet local needs for protein and to reduce beef imports. While producers and retailers may have had good reasons to increase their prices, Ahmed Sakr, a professor of management and institutional development at Alexandria University, blamed them for exaggerating the increases. “If the cost price of a commodity increases by 20 per cent, they raise the final price by up to 40 per cent,” Sakr said. He added that to make more profit producers not only increase their prices, but also reduce the size of packages because there is little supervision by the state or by consumer-protection associations. Another reason for the rising prices, Sakr said, was that manufacturers were unwilling to invest in order to expand their production lines, meaning that current production was unable to meet growing demand. Because of the lack of security in the country, manufacturers were also having to bear the added costs of securing production plants and goods during transportation, Sakr said. He added that in the absence of the state's playing a role in supervising markets, greedy retailers were holding back products in order to sell them later at higher prices. There had been clear evidence of monopoly practices in local markets, Sakr said, particularly in the food sector. A small number of importers or producers now controlled markets in areas such as meat, dairy products, sugar and tea. While food prices have been increasing steadily, income levels have remained static as the country's fragile economic climate continues to impact salaries. Not only are income levels largely fixed, but many people are losing their jobs, making it difficult for many households to buy basic needs, including food, clothes and shelter. According to a September 2012 survey by the cabinet's Information and Decision Support Centre in cooperation with the World Food Programme, 86 per cent of the 1,680 households surveyed reported that their income was insufficient for covering their total monthly needs, including for food, clothes and shelter, up from 74 per cent in June 2012. The survey said that low-income households in Egypt were being hit hard by rising food prices, placing a major strain on many poor families in the country that were already struggling to put basic staples on the table. It said that the increasing prices had prompted many families to consume cheaper food and to borrow food or money. “Since my husband lost his job a few months ago and due to the hikes in prices, I can't afford anything but onions to put in my 10-year-old daughter's school sandwiches,” said Nahed Samir, a housewife and the mother of two children.
