EGYPT – The Ministry of Supply and Internal Trade has announced a price increase for local and imported wheat used in producing subsidized bread, setting the new prices at LE 13,750 (US$448) per ton, reflecting a 20 percent rise from previous levels starting August.
Additionally, flour prices supplied to local bakeries have surged to LE 16,000 (US$645) per ton, effective from the beginning of August. This represents a 35 percent increase from the previous price of LE 11,800 (US$460) per ton.
Despite these adjustments, the cost of subsidized local bread will remain unchanged for consumers.
According to an official source cited by Asharq Bloomberg, the government will absorb the additional expenses, equating to 20 piasters (US$0.02) on the ration support card.
As the world’s largest wheat importer, Egypt provides subsidized bread to over 70 million residents through an extensive food subsidy program.
Earlier in May, Prime Minister Mostafa Madbouly announced that Egypt raised the subsidized bread price from 5 piasters to 20 piasters, marking the first increase in 30 years. He also noted that the government’s cost for each loaf of bread stands at 125 piasters (US$0.12).
He acknowledged the move would be unpopular but emphasized the need to “rationalize the burden on the state treasury to ensure the sustainability of subsidies.”
The bread subsidy program costs the Egyptian government nearly US$3 billion each year or approximately 60% of total expenditure on food subsidies.
Notably, Egypt produces a staggering 250 to 275 million loaves of bread daily through the existing subsidized bread system.
According to data from the Ministry of Supply, the real cost of producing a loaf of bread has risen to 1.25 pounds (US$0.026) from 1.15 pounds (US$0.024) a year earlier.
This has put too much pressure on the treasury, given that, recently, the government revised its bread subsidy policy, allowing the selling of discounted bread to citizens not enrolled in its ration card program through designated prepaid cards
The country, however, has been suffering its worst economic crisis for two years, with the currency losing two-thirds of its value and inflation soaring to a record 40 percent last year.
In addition, the government had attempted to bring down bread prices by increasing its flour supplies after receiving an injection of cash from several international financing deals, but the efforts hit roadblocks as free-market bakeries argued that reducing flour prices was not enough.
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