Egypt Has Quadrupled the Price of Subsidised Bread Amid Economic Challenges

In a politically significant move, Egypt has quadrupled the price of subsidised bread, risking potential social unrest as the country grapples with soaring inflation. The decision, announced by Prime Minister Mostafa Madbouly, increases the price of the small flat loaves from E£0.05 to E£0.20 each, marking a 300% rise in a price fixed since 1988.

Approximately 70 million Egyptians, constituting over two-thirds of the population, rely on subsidised bread, making it a critical component of the national diet. Despite the increase, bread will still be heavily subsidised, with the state bearing E£1.05 per loaf, according to Prime Minister Madbouly.

The decision reflects the government’s efforts to reallocate resources towards essential services amidst mounting debt servicing obligations, which currently consume about half of the budget. Despite historical reluctance to adjust food subsidies due to past social unrest, the move underscores the urgency of Egypt’s economic challenges.

Also Read: Egyptian Opposition Leader Ahmed Tantawy Arrested Amid Controversial Election Related Charges

Egypt’s economy has been strained by escalating inflation, exacerbated by Russia’s invasion of Ukraine in 2022, which triggered significant capital outflows and a foreign currency crisis. The resulting inflation, which stood at 32.5% in April, has eroded purchasing power and strained household budgets.

To address economic vulnerabilities, Egypt has pursued financial assistance, including an $8 billion loan deal from the IMF, as part of a $55 billion international bailout. However, the benefits of these measures have yet to translate into tangible improvements for citizens, highlighting ongoing economic hardships.

The decision to raise bread prices has sparked criticism from civil society groups, citing its disproportionate impact on low-income households. Analysts warn of potential social unrest, given bread’s pivotal role in Egyptian society and the historical precedent of riots in response to price hikes.

Moreover, the move underscores broader challenges facing Egypt’s economy, including rising food subsidy costs and the need for fiscal consolidation. As the government navigates these challenges, it faces the delicate task of balancing economic reforms with social stability.

While the increase in bread prices represents a significant policy shift, its implications for Egypt’s social and economic landscape remain uncertain. As the government seeks to address longstanding economic vulnerabilities, the decision reflects the complex trade-offs inherent in pursuing economic reform amidst social pressures and political constraints.