Feature: Egyptians suffer from soaring prices

0 Comment(s)Print E-mail Xinhua, September 11, 2013
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Samir Assad, an Egyptian civil servant, has to moonlight in a shop in downtown Cairo, explaining that "without a second job, I won't be able to feed my family."

As prices of basic commodities are soaring amid political turmoil, the man has to "work nearly 12 hours a day to put food on the table" for the family of five people.

Still, Assad is luckier than nearly 3.5 million fellow citizens who are currently unemployed, or the 25 percent who live under the poverty line.

After a long tour in the popular market of Attaba in the Egyptian capital, Mona Abdel-Qader, a 36-year-old housewife, came to the realization that she could not afford all the new stuff her three children need for the new school year.

"The prices are very high. The prices of some goods have doubled," said Abdel-Qader, whose husband is a civil servant with a monthly salary of 1,200 Egyptian pounds (about 174 U.S. dollars).

Eventually, Abdel-Qader went home, thinking how she is going to explain to her children they will have to use old school bags for the new school year.

Although Egyptian government still keeps the subsidy system despite a budget deficit of 14 percent of its GDP, residents in Cairo recently felt a rise in prices of basic commodities, as the urban consumer inflation rate rose to 10.28 percent in August.

The political turmoil and one-month curfew have badly impacted Egypt's economy, especially tourism and foreign investments.

While customers blame traders for high prices, traders have their own complaints, such as the closure of some factories and worsening security conditions.

"What do you expect from us, while prices of everything are getting high?" said a dealer of school bags, who admits the prices rose by nearly 50 percent from previous year.

Abdel Lattif Aly, another dealer, added that the Egyptian pound has been depreciating against the dollar.

Since the unrest that ousted president Hosni Mubarak in 2011, Egypt's foreign reserves declined from 36 billion dollars to less than 20 billion dollars, and Egyptian pound lost nearly 17 percent of its value against the dollar.

Last week, Egypt's Central Bank auctioned 1.3 billion dollars, aimed at financing strategic imports, such as wheat, meat and cooking oil.

The recent aid from Arab countries enabled the Egyptian government to adopt an economic stimulus plan, which will span between six to nine months and involve additional investment projects worth 22 billion Egyptian pounds (3.2 billion dollars).

Mohamed Abdel Aziz Hegazy, professor of economics at American University in Cairo, said that such inflation is normal in current economic and political circumstances.

"Apart from the Arab aid, we still can't see any concrete steps taken by the Egyptian government to push economy, relieve the poor and rationalize their expenditures," said Hegazy.

The professor cautioned that "if the government doesn't take necessary steps to reduce inflation rate, the consequences will be very dangerous."

Fakhry el-Fiqy, professor of economics at Cairo University, said the interim government needs to come up with an economic reform agenda and make quick decisions to end the sufferings of the poor.

"I wonder why the government doesn't take steps to freeze the prices of basic commodities, and why it doesn't activate anti- monopoly and customer protection laws," said el-Fiqy, a former assistant to executive director of International Monetary Fund. Endi

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