Business associations and officials rallied last week to keep consumer prices from spiraling. Mona El-Fiqi reports Despite repeated government announcements that the recent floatation of the pound should not result in higher prices for consumer goods, there have already been sharp increases. In response, government officials have begun holding a series of meetings with members of the Federation of Egyptian Industries and the Egyptian Federation for Chambers of Commerce. Concluding these meetings, Hassan Khedr, minister of supply and internal trade, announced that a package of regulations will be applied to control the prices of goods. Khedr explained that due to these price increases, which stand at between 10 and 35 per cent, the ministry decided that 55 food products, ready-made garments and a number of durable goods will be included on a price list. This list will be distributed to chambers of commerce. Traders will then be expected to sell their goods at these "list prices". However, in a press conference Khedr said that trade liberalisation will not necessarily lead to chaos in the market or a small number of traders controlling that market. Moreover, the Federation of Chambers of Commerce has announced that it will strictly apply a government law which states that any trader who raises prices or monopolises a product will be punished through the cancellation of his trading licence. The government also aims to import duty- free basic commodities which will be sold to consumers at fair prices. A supreme committee will be formed at the Chamber of Commerce to handle the prices issue with traders and provide compensation for traders who resist the urge to raise prices. Additionally, the Ministry of Supply and Internal Trade will establish exhibitions related to the sale of foodstuffs at reasonable prices in Cairo and other governorates. This week, Prime Minister Atef Ebeid met with Abdel-Moneim Seoudi, chairman of the Federation of Egyptian Industries (FEI), who presented a memo that explained producers' points of view. The FEI agreed that basic commodities should be sold according to previously announced prices. For example, they agreed that a kilo of packed rice should be sold at LE1.65, a kilo of packed sugar for LE 1.75 and a litre of food oil for LE 4.25. Last week, the FEI board of directors also met with members of the Chamber of Food Industries who refused to be blamed for increases in prices. They explained that higher foreign exchange rates were the cause of these increases. Safwan Thabet, chairman of the Chamber of Food Industries said that the food industry is facing two related problems: an increase in dollar rates locally and an increase in the price of some food products in international markets. Thabet illustrated this by saying that the global price for sesame, which represents 60 per cent of the cost of manufacturing halawa tehiniya, a staple in most Egyptian homes, rose from $490 to $900 per ton. Prices of food oil, 90 per cent of which is imported, increased from $360 to $470 per ton. Since 1 January 2003, prices of dairy products have also increased by 15 per cent. Sugar prices rose from LE1600 to LE1850 per ton. Even prices of imported packing materials increased. Although FEI Chairman Seoudi conceded that international prices were affecting the local market, he lambasted manufacturers who were raising the price of goods with no imported components. Seoudi also asserted that businessmen are not against the government's new policy of foreign exchange liberalisation but producers have to find a strategy to overcome this transitional phase. As a remedial measure Seoudi asked producers of food commodities to sell their products at the cost price plus a profit margin that does not exceed five per cent. However, FEI members agreed that the government should also do more to make the foreign currency needed for imports available at listed rates. Bahaa Helmi, chairman of Misr International Bank said that the Central Bank of Egypt needs to inject dollars into the market, thereby filling the gap between supply and demand for dollars and guaranteeing the success of the new foreign exchange regime. In another meeting held last week, exporters of food products decided to voluntarily relinquish the foreign currency earnings of food exports to the banking sector. Exporters also asserted that banks should make documentary credit available for imports of inputs and materials used in manufacturing goods whenever requested. Though exporters are not obliged to deliver their dollar earnings to banks they are hoping the government will provide support to those exporters who will deliver their earnings as promised.
