Egyptian shops struggle with supplies as government acts to tame prices

Supplies of basic foods at Egyptian supermarkets have been squeezed and some stores are rationing products, with shopkeepers blaming an import slowdown and speculation by traders as prices rise.

Headline inflation has surged to five-year highs of more than 18% in Egypt, spurring many shoppers to cut back on purchases or switch to cheaper goods. Core inflation, which excludes volatile items such as food, quickened to 21.5% in November.

The government has reacted over the past week by saying it will draw up indicative prices for key commodities and threatening legal action against shopkeepers who don't display prices.

"There's shortage in a lot of goods. Prices are increasing and goods are increasingly not available," said Muhanad Taha, a supermarket manager in Heliopolis, a relatively affluent Cairo neighbourhood.

"Some suppliers do not supply supermarkets with goods because each day their prices increase. This creates a problem for us."

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At one large supermarket in eastern Cairo, limits were placed on the quantity of basic foods including vegetable oil, rice and sugar, that each shopper could buy.

An assistant manager who gave his name as Mohamed blamed tightened supply from traders amid the import slowdown and a foreign currency shortage. Limits are needed to stop speculators buying large quantities for resale, he said.

Kerolos Medhat, a 34-year-old caterer in Cairo's Ain Shams district, said customers had been reducing orders that cost at least one-third more than before, despite his efforts to contain prices by sourcing cheaper brands.

"I always had a dream to open my own small restaurant, but this dream has been postponed several times because of high prices. When I think of my dream now, it's becoming more and more impossible."

Amid the economic headwinds, the government has put off plans for a possible overhaul of a politically sensitive subsidy programme that provides bread far below cost price to more than 70 million Egyptians. Subsidy cut plans have prompted unrest in the past.

The government has also pledged to expand cash transfers to poorer people and extend support to holders of ration cards under a new loan programme the International Monetary Fund approved on Friday.

But after austerity reforms aimed at liberalising the economy under a previous IMF programme agreed in 2016, many Egyptians say they have felt their living standards slip.

"Since 2016, every day prices have been getting higher. We've been facing this for years not (just) one year," said one shopper in Heliopolis, who asked not to be named because of the sensitivity of the subject.

"I'm from the era when we used to eat for free," she said. "We used to have (money) and save but now we don't have anything."

(Reuters)