News Column

Surge in fuel prices threatens food commodities

July 5, 2014

Sara Aggour

Following the government's decision to raise fuel prices, citizens fear the inflation of prices of food and necessary commodities

(Ricardo Garcia Vilanova/AFP)

Following the government's decision to raise fuel prices, citizens fear the inflation of prices of food and necessary commodities. According to the head of Citizens Against Price Rises Association Mahmoud Al-Askalany, such fears are "justified".

Al-Askalany said that surges in fuel prices would "definitely reflect on food prices".

"Any commodity that has transportation costs in their budget for expenditures will witness a price increase," Al-Askalany said, adding that this "would have bad consequences for Egyptian citizens."

Al-Askalany mentioned that the budget deficit must be minimised; however, this minimisation should not realised through the "pockets of the poor." He mentioned that subsidies should mainly be cut from businessmen, who can afford it.

Last month, Al-Askalany anticipated that decreasing spending on energy subsidies in the new general budget will raise market prices on basic items. He explained that petrol prices always drive the Egyptian market.

In order to control prices, the government should increase the product supply in state-owned consumer complexes and set a certain ceiling profit rate from the production costs, he noted.

Al-Askalany added that an emergency meeting will be held Saturday with the head of Consumer Protection Agency Atef Yacoub to discuss the issue of fuel price increases.

"So far none of our suppliers have called, saying they would increase the prices," a supermarket owner in Dokki said. "[The government] has been stating on Facebook that the prices of food would not increase but I doubt that."

"The prices of transportation would increase, which means that the cost of transporting the commodities from one place to another would increase, leading to an eventual reflection on the food prices," he added, noting that within a week it would be evident whether or not prices would surge.

In May, the Central Agency for Public Mobilization and Statistics (CAPMAS) released its monthly inflation report, saying that the prices of food and drink items were 11.8% higher year on year in May, although on a monthly basis prices fell 2%.

On Thursday, Minister of Supply and Internal Trade Khaled Hanafy announced that producers of cooking oils, poultry, dairy products, vegetable and frozen goods have "promised not to raise product prices in case fuel prices increased."

The minister added that owners of chain supermarkets and hyper supermarkets have made the same promises. Hanafy stated that producers are attempting to meet the needs of Egyptians and offer food items at discounted prices that would suit every household.

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Source: Daily News Egypt

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