Egypt has increased gasoline and diesel prices for the third time this year because the cost of subsidies is becoming too high
Egypt has announced that prices for many petroleum products will go up. Diesel prices will rise by 17.3%, and the price of automotive gas will increase by 7.7%. The government is unable to continue supporting these fuel costs because people are using more fuel.
Cutting Subsidies
The government has decided to keep the prices of mazut fuel for the food industry and electricity generation steady, which means the price of subsidized bread will not change.
The Egyptian fuel pricing committee has increased the prices of 80-octane and 92-octane gasoline by about $0.031 (EGP 1.5) each. The new prices are $0.28 (EGP 13.75) per liter for 80-octane and $0.31 (EGP 15.25) per liter for 92-octane gasoline.
The price of 95-octane gasoline also went up by $0.041 (EGP 2) to $0.35 (EGP 17) per liter.
Additionally, the price of diesel has increased from $0.24 (EGP 11.50) to $0.28 (EGP 13.50) per liter. The price of mazut rose from $174.8 (EGP 8,500) to $195.4 (EGP 9,500) per ton, and automotive gas went up from $0.12 (EGP 6.5) to $0.14 (EGP 7).
In July, Egyptian Prime Minister Mostafa Madbouly announced that the prices of fuel products would slowly rise until the end of 2025 because the government cannot continue to pay for fuel subsidies due to increasing demand.
The fuel pricing committee stated that these changes aim to reduce the difference between the selling prices of fuel products and their high production and import costs.
The committee usually meets every three months, but its next meeting will be in six months instead.
Bread Subsidy to Continue
The Egyptian Minister of Supply and Internal Trade, Sherif Farouk, said that the price of subsidized bread will stay the same at 20 piastres per loaf (which is less than one cent). Most bakeries that sell this bread use diesel fuel and gas to operate.
Minister Farouk explained that the government considers all costs related to making subsidized bread, including the prices of diesel and gas. The government will keep paying the extra production costs and will help bakery owners through the General Authority for Supply Commodities.
Recently, the Egyptian government increased the price of subsidized bread and noted that the total subsidy is around $2.22 billion (EGP 105 billion) each year.
Rising Inflation
At the end of July, the Egyptian government raised fuel prices by up to 15%. This led to higher prices for train and subway tickets, which caused inflation to go up.
In August, inflation in Egypt increased again after five months of going down. It reached 25.6% and went up to 26% in September, according to the Central Agency for Public Mobilization and Statistics.
Recently, Egypt has started cutting back on subsidies for some essential services and goods. In August, Prime Minister Madbouly mentioned that the country might stop subsidizing basic goods and instead give direct cash assistance to its poorest citizens starting next year.
Right now, Egypt subsidizes essential goods for more than half of its population, with over 60 million people receiving items like pasta, vegetable oils, and sugar at lower prices from government stores. At least 10 million people also get subsidized bread.
The government provides fuel subsidies but plans to gradually reduce this support, aiming to completely remove subsidies by December 2025.
Published: 18th October 2024
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