Egypt Daily News – The Egyptian government has increased fuel prices by 8-17%, effective last Friday. The price of 80-octane gasoline, the most commonly used fuel for public transport, has risen to 13.75 pounds ($0.28) per liter, while diesel now costs 13.5 pounds per liter.
This increase also applies to diesel supplied to industrial sectors, now priced at 9,500 pounds ($195.52) per ton.
This hike is part of a planned gradual increase in fuel prices until 2025, aimed at reducing the fuel subsidy burden in the national budget.
Experts and officials anticipate that these price hikes will trigger a new wave of inflation, impacting sectors such as real estate and food due to increased production and transportation costs. They expect such effects to become evident in inflation readings for the last quarter of this year.
This latest hike marks the third fuel price increase in Egypt this year. Previously, prices were raised in March and July by over 10%, resulting in total increases of 33-38% for gasoline and over 63% for diesel since the beginning of the year.
Kamal El-Desouki, a board member of the Egyptian Federation of Industries, stated that the fuel price increase will lead to higher costs for all industrial products, contributing to rising inflation, especially as diesel is crucial for transporting raw materials and finished goods.
The current government’s budget for petroleum subsidies has increased by 35.1 billion pounds ($722.4 million), bringing it to a total of 154.5 billion pounds ($7.5 billion).
El-Desouki noted that commodity prices have already started to rise at varying rates, depending on how reliant each commodity is on fuel during production, especially within food and transportation sectors. He believes that the price hikes for commodities have exceeded the planned increases in fuel prices.
Prime Minister Mostafa Madbouly acknowledged the government’s understanding of the strain rising prices place on citizens but stated that the government felt compelled to make these increases due to the significant financial burden from rising fuel prices.
Mohamed Al-Bostani, head of the New Cairo and Administrative Capital Developers Association, remarked that while the impact of fuel price increases on property prices is limited compared to rising costs of construction materials like cement and steel or the increasing dollar price, real estate development companies might absorb these costs without passing them on to consumers.
According to local commodity price data, investment-grade steel has seen a slight decrease to 39,944 EGP ($822.08) per ton, while gray cement has increased by 7.58%, reaching an average of 2,810 EGP ($57.83) per ton.
Al-Bustani believes that the fuel price hike will not diminish demand for real estate, which remains strong, and he refutes concerns about a potential real estate bubble in the Egyptian market, highlighting the competition among development companies that benefits customers.
Economist Medhat Nafeh stated that the fuel price increase is likely to spur inflation due to higher production and transportation costs, alongside rising living costs from increased service prices, such as transportation rates, which could surpass the fuel price hikes. He referenced the earlier electrical price increases that caused a general rise in goods prices and inflation rates during the summer.
The Central Agency for Public Mobilization and Statistics reported a monthly consumer price index change of 2.1% for urban areas in September 2024, remaining consistent year-on-year. Overall urban inflation was recorded at 26.4%, up from 26.2% in August.
Nafeh expects all economic sectors to feel the impact of rising fuel prices, particularly those reliant on energy inputs, predicting that both monthly and annual inflation rates will rise as a direct consequence of the fuel price hikes.
