What:
To slow down inflation, the Egyptian government has mandated significant price reductions across various commodities. This directive follows a series of meetings between key stakeholders, including the Ministry of Supply, the Federation of Egyptian Chambers of Commerce, and the Federation of Egyptian Industries.
Targets:
According to a cabinet statement, businesses are expected to slash prices by up to 30%, starting with initial reductions of 15-20% this week, with plans to reach the full 30% mark following the Eid Al Fitr holiday. [BTW: Experts gave us their take on the impact of seasonality on inflation here.]
Meeting Industry Leaders:
Prime Minister Mostafa Madbouly convened meetings with manufacturers, producers, and suppliers spanning a wide array of commodities, encompassing staples like sugar, grains, rice, wheat, and flour, as well as engineering, electronic goods, and commercial chains. These sectors collectively represent over 70% as per the same statement.
Egypt vs. Inflation:
Madbouly emphasized the necessity of breaking the inflationary cycle by aligning price reductions with the decline of the USD-EGP exchange rate on the parallel market. The move aims to mitigate the impact of recent fuel price hikes, which are expected to drive inflation rates up by 1.5% in March and 3-4% in April, according to CI Capital Holding Senior Economist Sara Saada. However, other experts told Claps that they anticipate a slowdown in inflation for March.
Some Context:
In related efforts to stabilize prices, the government is considering increasing strategic reserves of basic commodities by 20%. President Abdel Fattah El Sisi also proposed allocating USD 1-3 billion to import essential goods, potentially competing with the private sector to drive prices down. These measures reflect a proactive approach to address inflationary pressures and ensure affordability for consumers. You can read all about it here.
