Egypt’s cost of living has soared as the inflation rate reached a dizzying 32.5% in April of this year. In a country where 30% of the population is estimated to live in poverty, the increased prices are forcing many to make drastic lifestyle changes.
Shima, a 39-year-old teacher from Cairo is finding that her 6000 Egyptian pounds (approx £98.00) monthly salary no longer stretches as far as it used to:
“I used to be able to go out with my family at least once a week. Now we can only afford to go out about once a month.”
It is not only non-essential activities such as socialising that Shima and her family have had to cut down on:
“Towards the end of the month, we can’t even afford to buy meat.”
Soaring food prices are becoming a major issue for Egyptians, especially after the government raised the price of subsidised bread by 300% last month. The cost of bread has long been a source of contention in Egypt. In 2011, during the coup that overthrew President Hosni Mubarak, protestors chanted: “bread, freedom and dignity!”.
Egypt’s cost-of-living rise ‘unbelievable’
The government insists that the existing bread subsidy scheme is unsustainable and the changes will bring much-needed savings, but for ordinary Egyptians who are dealing with the repercussions of a weak currency and soaring inflation, such a huge increase in the price of a necessity such as bread must feel particularly unfair.
Mohamed, a 45-year-old Egyptian who now lives in the UK was shocked at how much the price of food had increased during his recent visit to Cairo:
“A whole chicken used to cost about 30 Egyptian pounds (EGP) when I lived in Egypt 10 years ago. Now it costs 200 EGP. A kilogram of beef is now 450 EGP, 3 years ago it was 250 EGP. It’s unbelievable.”
Mohamed worries about his family living in Egypt, and their ability to cope with costs that are skyrocketing:
“My sisters both pay for private schooling for their children as in their areas, the free government schools can have up to 50 children in a class. I honestly don’t know how long they will be able to afford it.”
A perfect storm
One of the factors driving these price hikes is the $14.9bn Egypt owes to the IMF, a figure that makes it the second largest debtor worldwide.
The government is passing on price increases to the Egyptian people to plug this mounting deficit. As well as increasing the price of bread, other contentious rises include doubling the cost of tickets on the Cairo underground and implementing daily power cuts. The power cuts are estimated to have saved $300mn, however, after 40 people died during a recent heatwave in the south of the country, many have urged the government to rethink the scheduled outages.
In return for increased financial assistance, the IMF has demanded that Egypt float its currency in a move meant to combat inflation and attract foreign investment. Within hours of the move, the Egyptian pound had lost more than 60% of its value against the dollar. While this devaluation will make Egypt’s exports more competitive and reduce its trade deficit, it will also further diminish the spending power of an already embattled population.
With its neighbours, Gaza and Sudan both currently engaged in bloody wars, Egypt’s geopolitical position is further hindering any hopes of an economic revival. An estimated 460,000 refugees have fled to Egypt since the outbreak of the war in Sudan in April 2023, and freight travelling on the economically pivotal Suez Canal dropped by 45% in the two months following recent Houthi attacks on shipping vessels.
It is not immune from conflicts further afield either. Its heavy reliance on wheat imports from Russia and Ukraine meant the surge in wheat prices to a record $450 per tonne following the war outbreak, added further to Egypt’s woes.
Green shoots of recovery
Amongst the bleakness, there are tentative signs of recovery.
May 2024 saw inflation in the country sink to an 18-month low. Egypt has also secured financing of $51.1bn, comprised of a $8bn loan from the IMF, a $8.1bn aid package from the European Union and a $35bn investment from Emirati wealth fund Abu Dhabi Developmental Holding Company.
It has spent an estimated $59bn building a new administrative capital: New Cairo. Critics have argued that Egypt simply cannot afford the huge price tag, but the government promises the city will deliver much-needed jobs and housing.
It is too early to tell if Egypt is truly on the road to economic recovery. But one thing is for sure: the 111 million citizens of the Arab world’s most populous nation will be praying that it is.
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