The Egyptian government has introduced new economic measures to absorb shocks from the global inflationary pressures caused by the ongoing Russia-Ukraine conflict, as well as the lingering Covid-19 pandemic.
At a surprise meeting on Monday, the Monetary Policy Committee of the Central Bank of Egypt (CBE) decided to raise key interest rates by 1 per cent, a first since 2017, reports Xinhua news agency.
The overnight deposit and lending rates were both raised by 100 basis points to 9.25 per cent and 10.25 per cent, respectively, according to a central bank statement.
Soaring commodity and energy prices have added strain on the economy of Egypt that targets a inflation rate of 7 per cent for the fourth quarter of 2022, the statement noted.
According to official statistics, the annual headline inflation in Egypt rose to 10 per cent in February from 8 per cent in January because of the rise in food prices.
“Achieving low and stable inflation rates in the medium term is a prerequisite for supporting the purchasing power of the Egyptian citizens and achieving high and sustainable growth rates,” the statement said.
On Monday morning, the trading price of one US dollar against one Egyptian pound jumped to 17.5 pounds for buying and 17.4 pounds for selling, after having stabilized at around 15.6 pounds for two years, according to the National Bank of Egypt.
Meanwhile, the Egyptian cabinet said it has set a fixed price for unsubsidized bread for three months in an effort to ensure food security for those who mainly depend on bread in their meals.
Under the new pricing system, the price of a 45-gram flat loaf is sold at 0.5 pounds, a 65-gram loaf at 0.75 pounds, and a 90-gram loaf at one pound, while packaged bread sold in supermarkets and grocery stores is priced at 11.5 pounds per kg, according to a cabinet statement.
Retailers who do not comply with the new pricing system or hoard commodities will face a fine of 100,000 pounds ($5,714) to 5 million pounds ($285,714).
The price of subsidized bread has remained unchanged in Egypt for decades.
About 60 per cent of the 102 million people in Egypt live on the bread allocated under the subsidised food card system, which costs only 0.05 pounds a loaf.
The bread consumption per capita in Egypt is 150 to 180 kg a year, nearly three times of the global average, according to official statistics.