Egypt returns to bread price controls as war inflation fears grow

Egypt has set maximum prices for ​unsubsidised bread sold in private bakeries, reviving price controls on staple food as the government ‌seeks to limit the impact on consumers of an expected rise in inflation due to the Iran war.

Inflationary pressure is growing after a spike in global oil prices due to the war, which prompted Egypt to raise fuel prices, and analysts say the pressure ​will ripple through transport and production costs across the economy.

Egypt relies heavily on bread as ​a dietary staple, making price changes politically sensitive in the country of about 120 ⁠million people.

In a ministerial directive issued on Thursday, Supply Minister Sherif Farouk capped the price of unsubsidised ​loaves sold outside the state bread programme at 2 Egyptian pounds ($0.04) for an 80-gram loaf. The same ceiling ​was set for a 50-gram fino bread roll commonly used for sandwiches.

Smaller loaves were assigned lower maximum prices, with a 60-gram loaf capped at 1.5 pounds and a 40-gram loaf at 1 pound, the ministry said in a statement.

The measure aims ​to regulate markets and ensure citizens can obtain bread “at fair and appropriate prices,” the ministry said, adding ​that authorities will monitor bakeries and penalise violations.

QUALITY RISK

Egypt is typically the world’s largest wheat importer, relying on foreign supplies ‌for ⁠more than 50 per cent of its consumption, to meet demand from both the private market and a subsidised bread programme that serves about 69 million people.

Similar measures have been temporary in the past, most recently in 2024 and 2022. But industry representatives questioned whether the government could effectively control prices in the unsubsidised market.

“There is ​no way the government can ​control the price of ⁠unsubsidised bread,” a grain industry source told Reuters on condition of anonymity.

If forced to sell at capped prices, bakeries might compensate by lowering quality, the source ​said, noting that wheat prices have recently risen by about 2,000 Egyptian pounds ($38) ​per tonne to ⁠around 16,000 pounds ($305), following fuel and transport price hikes.

“Not all wheat is equal. There is wheat with 12 per cent protein and wheat with 11 per cent. You cannot treat them the same,” the source said.

Khaled Sabry, spokesperson for the bakeries ⁠division ​at the Federation of Egyptian Chambers of Commerce, said that higher ​costs add only a small increase per loaf that bakeries may have to absorb, while supply and demand should discourage bakeries from ​producing low quality loaves.