Egypt’s Soaring Wheat Prices Bring Food Security Concerns

Egypt is pushing for reforms following the disruption of the wheat market and soaring inflation and while experts see no immediate food scarcity, the future will depend on real reforms to prevent another uprising.

In Egypt, around 30,000 bakeries sell subsidized bread, and 5,000 bakeries sell not-subsidized bread

This week was a turbulent one for Egypt’s 102 million people.

First, the government devalued the Egyptian pound by 14% against the US dollar after the war in Ukraine triggered a hike in prices for wheat products and other foods.

The devaluation was meant to counter pressure on the currency caused by foreign investors pulling billions of dollars out of Egypt’s treasury markets.

Subsequently, to address the resulting spike in inflation, the central bank increased interest rates by 1%, citing “domestic inflationary pressures and increased pressure on the external balance.”

Then, to counter the soaring prices for non-subsidized bread, Egyptian Prime Minister Mustafa Madbouly introduced a price cap for the next three months.

A 90-gram loaf will now be sold for 1 pound (€0.05, $0.05) at around 5,000 bakeries throughout the country, according to Abdullah Ghorab, head of the General Bakery Division of the Federation of Egyptian Industries.

By comparison, vendors sell subsidized bread for around 0.05 Egyptian pounds at about 30,000 bakeries, he told DW.

The government also announced an economic aid package worth 130 million pounds, acknowledging that the recent price hike has exacerbated the hardships faced by a population that was suffering from rising poverty, a contracting private sector and declining labor force participation even before the coronavirus pandemic hit.