Egyptian Traders Confirm Ongoing Decline in Goods Supply Amidst Soaring Prices
A number of food commodities traders in Egypt have confirmed that continued contraction in the supply of goods is behind the continuous rise in prices, despite the stability of the dollar in banks at 31.95 pounds.
Prices for dollars and fuel in the markets were stable during June, in addition to the ongoing customs release of goods and goods piled at ports, but despite this, price increases for some goods are recorded daily, which caused inflation. for the entire republic, the highest growth of 0.36.8% was registered in June last year, mainly due to rising prices for consumer goods such as meat, poultry, eggs and dairy products.
Ahmed Al-Wakil, head of the Alexandria Chamber of Commerce, said there was volatility in Egypt’s markets, continuing: “It’s not about the prices of the dollar against the pound, but rather about the politics of supply and demand.”
He added that the supply of goods decreased due to restrictions on imports, which led to a shortage of factory production.
He continued: “Until now, the production of companies has not returned to levels that correspond to the volume of demand, and it will take some time before it can meet the needs of the local market.”
After reaching a loan agreement with the International Monetary Fund, the Central Bank announced in December last year the return of collection documents for imports from abroad, as well as the cancellation of the decision to open documentary letters of credit issued in February 2022, which created a state of accumulation of goods in ports worth 14 billion Egyptian pounds.
And the Ministry of Finance reported that in the first five months of 2023 it produced goods worth $32 billion.
Al-Wakil pointed out that in the coming period, the government should work to increase the production capacity of factories, releasing goods immediately upon their arrival, which will help restore the balance between supply and demand in the markets.
He also urged the government to clearly announce monetary policy regarding the exchange rate, saying: “There is no problem that we have a hard currency shortage crisis, but most importantly, the government should clarify the details of this crisis. rather than leaving the markets to wait, which encourages traders to delay.” Subtracting goods before determining the calculation of the cost of production based on these expectations.
For his part, Hazem Al-Menoufi, a member of the commercial department in Alexandria, said that there is a lack of discipline in the Egyptian market, explaining that many companies justify rising prices for goods by increasing the cost of production, despite their stability.
He continued: “I don’t know why the price of sugar is rising by £6,000 a tonne despite it being locally available and not being imported, in addition to coffee, which traders have raised by about 10% despite its huge reserves. before applying a development fee to it.”
He pointed out that the instability of prices and their rises, which occur almost daily, had a negative effect on the turnover of merchant’s capital, pointing out that the purchasing power of merchants in goods was significantly reduced, since they could not bear the price increase. what happened to the companies.
Hisham El-Degwi, head of the food division at the Giza Chamber of Commerce, attributed the increase in commodity prices to some of the monopoly practices of big traders and importers, explaining that the retailer had nothing to do with the price increase.
He explained that there was a shortage of some goods in the local market, despite the availability of some merchants and factories, citing “sugar” as an example, where he said: “In just two years, it has grown by a very large percentage.” weeks due to the monopoly on this product of some large merchants and factories.
El-Degwi said the prices of some strategic commodities fell significantly, pointing to a drop in the price of rice to 21 pounds per kilogram compared to 33 pounds at the beginning of the second quarter of this year, and the price of blended oil fell to 50 thousand pounds per kilogram. tonne, compared to £65,000, indicating that these prices are “wholesale” and add shipping and handling costs and a profit margin to get to the consumer, increasing to a maximum of two pounds per kilogram.
He noted that despite these price cuts for two strategic commodities, large companies that sell these commodities in the local market have not yet reduced their prices, and smaller companies have announced new price lists to match the cut.