By Jana al-Masry | 2024-06-10

CAIRO -- The Egyptian government's decision to raise the price of bread for the first time in 30 years is unpopular but necessary, given the staggering rise in the price of wheat, experts said.

"The decision to partially lift subsidies on bread and increase the price of a bundle of bread was not surprising at all," said Ain Shams University economics professor Shaher Abdullah, noting that economists had anticipated it.

Amid all the analyses, explanations and statements about the reason for raising the price of bread by up to 300%, he told Al-Fassel, many people overlooked the main reason, "namely that it is a consequence of the actions of Russia."

Since Egypt is one of the largest importers of wheat, "it was natural that the Egyptian budget would be affected by these increases, which put the government in an awkward position due to the high rate of subsidies," he said.

"Before the Ukrainian crisis, the cost of producing one bundle of bread (five loaves) did not exceed 65 piastres, and the government sold it for 5 piastres."

"After the Ukrainian war, the [production] cost reached 125 piastres, and the government was still selling it at the same price," he added. "Even after the price was raised, the subsidy for one bundle was at least 105 piastres."

Egypt produces around 100 billion bundles of subsidized bread each year, which are available to purchase via 23 million ration cards, Abdullah noted.

Around 70 million people directly benefit from the bread subsidy.

A difficult time

Cairo bakery owner Ragab Abdel Nabi told Al-Fassel he expected angry reactions from customers after the price of subsidized bread was raised to 20 piasters from 5 piasters.

But people are aware "of the successive global crises, especially the Russian war on Ukraine and its repercussions on the increases in prices across the board, and not just in the price of wheat," he said.

There is an additional problem with "massive waste" with subsidized bread, he said, as people tend to buy more bread than they need just because it is priced low.

"What is left over is either thrown away or gathered and sold to owners of feed stores who turn the crusts into fodder for poultry," he added, noting that this is common across Cairo.

The decision to partially lift subsidies "is very bold but comes at a difficult time for both the government and citizens," Abdel Nabi said.