Egyptians have been enjoying Ramadan with cautious optimism as the price of everyday essentials stabilises following runaway inflation in recent months that caused widespread shortages during the holy month last year.
Inflation fell dramatically in February to 12.8 per cent, down by half compared to the previous month. Though it remains high, it is a far cry from the all-time peak of 38 per cent recorded in September 2023. Shortages in food supplies have also eased. However, Egyptians remain wary about the future with further austerity measures on the horizon.
“Last year, there was no sugar. You had to wait in line and often go home empty-handed,” Mona Gaber, 48, told The National. “This year, sugar is everywhere, of good quality, and selling at 27 pounds a kilo. It's great to be able to make the desserts we love and share them with neighbours.”
In Ramadan last year the government rationed sugar sales to 1kg per purchase. Ms Gaber recalled Egyptian President Abdel Fattah El Sisi jokingly blaming the shortage on Egyptians overusing sugar in the traditional Ramadan dessert kunafa, which is made from strands of filo pastry.
Other essential goods have also seen significant price drops in recent weeks. Rice, which peaked at 32 Egyptian pounds per kilo last Ramadan, is now selling at 16 pounds.
Onions and tomatoes, staples of Egyptian cuisine, have halved in price. However, some items like meat remain expensive at 450 pounds per kilo, the same level as last year.
The brighter outlook is largely due to an influx of foreign currency over the past year. The drop in inflation for February, though celebrated by the government, has been attributed to the high base figure in February last year.
A $35 billion investment from an Emirati consortium to purchase Ras El Hekma, a stretch of Mediterranean coast near Marsa Matruh, along with an IMF deal to lend $8 billion over four years, boosted Egypt's foreign currency reserves and enabled more imports of food and manufacturing inputs. Egypt received the fourth tranche of the loan last week after the IMF approved it under a fourth review.
Authorities have also cracked down on a once-thriving black market for US dollars, with dozens of arrests of currency traders made last year. Goods prices were particularly high ahead of last year’s holy month due to a sharp rise in the black market rate for the dollar, which was in short supply in Egypt’s banks.
The lack of foreign currency made the black market the only viable option for importers in need of dollars to clear goods at the nation’s ports. Consumers were consequently made to bear the burden of exorbitant exchange rates on the black market.
To eradicate the unofficial trade, the Central Bank of Egypt devalued the local currency in March last year, the fourth devaluation since 2022. The Egyptian pound has depreciated by more than 70 per cent since then.
Economist Dr Moustafa Badra said the increased foreign currency inflows allowed the government to address many of the issues that caused dramatic food price hikes last year. “The availability of dollars allowed the government to import more food and other necessities to boost local manufacturing,” Dr Badra told The National.
However, Egyptians are bracing for another round of subsidy cuts on fuel and electricity, slated to take effect by the end of this year, which experts warn could stoke inflation again. Prime Minister Mostafa Madbouly said on Wednesday that the government plans to lift all energy subsidies by December, at which point fuel prices will be at market rates.
"Implementation of the structural reform agenda under the program has been mixed with notable delays on reforms related to the divestment and to leveling the playing field between public and private sector enterprises." said the IMF's Egypt representative Ivanna Vladkova Hollar in a press briefing held last week to announce the results of the fund's latest review of the Egyptian economy.
The lender is pushing for further austerity as a condition of its support.
Despite the economic challenges, which dominated headlines in 2023, Egyptians have recently had their attention diverted by regional conflicts. Israel's war in Gaza and the consequent conflicts in Lebanon, Syria, Iran and Yemen have dominated news coverage. The arrival of 1.2 million refugees fleeing civil war in Sudan has also offered perspective.
“We were sad about our lack of money and how expensive everything was,” said Samy Ragab, 48, a grocer in Giza's Talbia neighbourhood, where many Sudanese have settled. “But we watched children blown to pieces in Palestine and spoke to Sudanese newcomers about the horrible crimes in their country.”
Mr Ragab recounted a conversation with a Sudanese neighbour who expressed amazement at the goods and services Egyptians take for granted. “He told me people in some areas of Sudan are grateful to find enough flour for a week of meals. It changes your perspective when you hear that.”
This shift in mindset has been encouraged by Egypt's leadership, with Mr El Sisi reminding citizens to be thankful for the safety and security his government provides compared to neighbouring states. This line has also been pushed hard by pro-state media, by far the most watched in Egypt.
The improved economic conditions have manifested in a notable surge in charity offerings this Ramadan. Charity banquets, which provide free iftar meals to the poor and were scarce last year due to economic strain, have made a notable comeback.
“On our street last year, there was only one charity banquet. This year, there are three,” said Mr Ragab, “I think last year, prices were changing so much that people wanted to see where things were headed before they gave to charity. This year, because prices have stayed the same, it seems that people are more reassured.”
Looking ahead, experts warn that the planned subsidy cuts could lead to another wave of inflation, while the IMF continues to push for more private sector growth.
But for now, as the holy month enters its final days, Egyptians are cautiously optimistic, savouring the relative abundance and affordability of goods compared to last year, comforted by the fact that at least until the end of June, prices will remain as they are.
“This Ramadan is so much better than last year, thank God,” Mariam Sannad, 35, told The National while shopping at a bustling market in Giza. “I wouldn’t go as far as saying that people are happy with the prices, but we have gotten used to them at least.”
