Egypt will maintain the prices of its heavily subsidised bread amid a 17 percent hike in fuel prices, as the world continues to grapple with an energy crisis, Supply Minister Sherif Farouk said in a statement on Tuesday.
Egypt, one of the world’s biggest importers of wheat and gas, will "take precautionary spending rationalisation measures", Prime Minister Mostafa Madbouly said, as the region reels from the economic impact of the joint US-Israeli war on Iran.
Cairo said it would "absorb additional production costs, including those from higher diesel prices, to prevent any financial burden".
Subsidised bread is a cornerstone of Egyptian society, benefitting around 105 million Egyptians, who mostly live close to or under the poverty line. The bread, known as eish baladi, has been supplied under a decades-old programme that combines food subsidies and bread allowances.
Subsidy card holders receive an allowance of five flat, round baladi bread loaves per day per family member.
In June 2024, the Egyptian government moved to increase the price of bread from 0.05 Egyptian pounds ($0.0011) to 0.20 pounds per loaf, drawing nationwide anger.
On Tuesday, Egypt announced a rise in domestic fuel prices of 17 percent, which came in light of “the exceptional situation resulting from the geopolitical developments in the Middle East region, and their direct effects,” the petroleum ministry said in a statement.
The statement came days after Madbouly said Cairo might resort to "exceptional measures" if fuel prices rise globally due to the US-Israeli aggression on Iran.
Oil and gas prices have skyrocketed this week due to the Strait of Hormuz crisis, where Iran is carrying out retaliatory attacks on transiting shipments - dramatically reducing the number of vessels passing through the strait.
The crisis has also forced several oil-producing nations, such as Saudi Arabia, to dramatically reduce their oil production.
Egypt’s decision to hike prices comes after a similar move in October, where fuel prices increased from 10.5 percent to 12.9 percent.
The increase included a 3 Egyptian pound increase per liter of gasoline, raising the price of 95-octane from 21 to 24 pounds per liter ($0.45). The price of a 12-kilogramme butane cylinder also increased by 25 pounds, increasing from 225 to 275 pounds, and a 25-kilogramme cylinder from 450 to 550 pounds. The price of natural gas for vehicles also rose from 10 to 13 pounds per cubic meter.
The ministry stated that "in the face of these challenges, the state continues its efforts to bolster domestic production and advance exploration and development of Egypt's oil and gas resources by encouraging investment partners to expand their activities, all within the framework of working to reduce the import bill".
The statement added that "the Egyptian government is closely monitoring market developments and costs, working to ensure the sustainability of petroleum and gas supplies for citizens and all sectors of the state”.
Last week, days following the outbreak of the assault on Iran, President Abdel Fattah el-Sisi said Egypt was in an economic "state of near-emergency" as a result of the ar, and warned of a rise in inflation, raising fears of a devastating economic impact on the country, which heavily relies on imports of basic needs.