Egypt’s efforts to lower bread prices hit roadblocks despite a significant drop in the price of flour

EGYPT – The Egyptian free-market bakeries have not brought down the price of loaves for customers despite the government’s efforts to ensure a significant drop in the price of flour.

This has sparked a potential standoff between the authorities and independent bakers.

Last month, the Egyptian government announced that it would be implementing a three-month price control mechanism to keep prices down and threatened fines to any bakers who sold their bread at a higher price.

The government had attempted to bring down prices of bread by increasing its supplies of flour, after receiving an injection of cash from several international financing deals, bringing the price of flour down by between 15 and 25 per cent, depending on the flour’s quality.

According to Abdullah Ghorab, head of the bakeries union at the Federation of Egyptian Chambers of Commerce, the drop in flour price should have brought down the price of non-subsidised loaves by a similar amount.

Mr Ghorab promised that the drop in flour prices would be reflected in the price of loaves once the Eid Al Fitr break was over on Monday.

However, The National visited several bakeries recently and found that, across the board, the price of a loaf of free market bread, which is known as “tourists’ bread” on the Egyptian street, had not come down.

Unlike subsidised bread, which is subject to fixed prices and government oversight to prevent price gouging, tourists’ bread prices can range from 2.5 to 4 Egyptian pounds per loaf, depending on the neighbourhood.

While subsidised bakers face severe penalties for any attempts to raise prices, those selling tourists’ bread can adjust prices more freely, often catering to a more affluent clientele.

This flexibility, however, has drawn criticism as it can lead to pricing inconsistencies and challenges in ensuring affordability for all segments of society.

Gamal Hassan, a seasoned baker in Cairo, explains the nuanced dynamics at play, highlighting the diverse factors influencing bread prices beyond flour costs alone.

He emphasizes the impact of rising rent rates and recent hikes in gas prices on bakery operations, underscoring the complex web of economic pressures faced by local businesses.

In response to the government’s efforts to enforce price controls and crackdown on profiteering, some bakers have opted to increase loaf weights rather than reduce prices, viewing the recent drop in flour costs as a temporary respite amidst broader economic uncertainties.

For all the latest grains industry news from Africa, the Middle East, and the World, subscribe to our weekly NEWSLETTERS, follow us on LinkedIn, and subscribe to our YouTube channel.