CAIRO: Despite a trend that has seen global food prices fluctuating significantly in the months following the global financial meltdown, Egypt's food prices are expected to experience softer price shifts than the global norm, experts predict. Egyptian newspapers have begun to speculate that the economic crisis could lead to decreased food prices in the Egyptian market, but so far, it seems, those decreases have been minor, if at all. Though food price data for the last couple of weeks in Egypt may not be published for some time, anecdotal evidence suggests that prices have slightly declined in recent weeks. At the Metro supermarket in Zamalek, one of the store managers, who spoke on condition of anonymity because he was not authorized to speak for the corporation, noted that prices have seen minor movement. "The price for tomatoes is the same, he said as an example, "all the prices have not changed. More telling though, may be reports from two smaller, local markets in Zamalek which both note little change in prices over the past couple of weeks. These kinds of markets may be among the first to reflect price changes because they do not enjoy the luxury that the big corporate names have of using capital to pad short-term price movements. Economic experts, furthermore, echo the sentiment that food prices in Egypt may not be broadly affected by the global economic slowdown. "In my opinion, the food prices will begin to get stable in the next few days, said Amr El Far, who runs the retail trading division for Egyptian investment bank Naeem, in reference to recent fluctuations in the global market. "From two months ago, the economic overview is starting to be stable, he said. "This is reflected in the stock market. This stabilization, argued El-Far, is critical to the long-term stability of food prices. "I don't believe the food prices in Egypt will go down so much, he added. At the root of El-Far's argument are commodities futures, contracts signed for terms, set in months or years, and designed to establish a steady food supply to a country and minimize the impact of price changes. "The high prices from the food will be the same for three months, he added, noting that Egypt, a massive food importer, might see an eventual decline in prices as new future contracts are signed. Egypt purchased 265,000 metric tons of wheat last month from the US and Russia, Bloomberg reported. Wheat prices have fallen steadily on the global market since the financial meltdown and since the cost of energy has slid dramatically. Egypt's wheat supply, therefore, affected by the bulk purchase in early October, will only partially reflect the slide in the global price of wheat. "Clearly international prices have gone down, said Reham ElDesoki, an economist at Egyptian investment bank Beltone Financial. "But I don't think local goods have gone down that much. ElDesoki argued that food subsidies were already in place to bear some of the burden brought on by global food prices, which rose sharply earlier this year. Subsidies, she said, were "basically the government trying to alleviate the pressure. Subsidized goods, echoed EFG Hermes economist Simon Kitchen, "you would expect to be more stable, but with the non-subsidized goods, you might expect to see those prices fall. ElDesoki noted that a number of goods are semi-subsidized and that they may experience a modest price decrease in the long-term, reflecting the global trends. Kitchen also discussed the disparity in price movement between Egypt's markets and the global food markets. "In general, in Egypt, you find that prices tend to be a little sticky, he said. Another factor, though, may be continuing to impact local food prices beyond subsidies and future contracts. "There is rent-seeking behavior in the local market, said ElDesoki, explaining that local vendors are still successfully passing high prices onto the consumer instead of reflecting small decreases that the global market may be passing on. As data begin to emerge on food prices since the start of the financial crisis, there are reasons to be hopeful going forward. The Egyptian Information Portal announced this week that the producer price index fell 2.1 percent in September to 163.3. Though more data will emerge over the coming weeks and months, economists predict at least modest declines in food prices in the coming months.
