Flour cost reduction fails to lower bread prices in Egypt

Egypt’s free-market bakeries, whose operations and prices differ from ones that sell subsidised bread, have not brought down the price of loaves for customers despite a significant drop in the price of flour.

The Egyptian government announced last month that it would be implementing a three-month price control mechanism to keep prices down and threatened fines to any bakers who sold their bread at a higher price.

But several bakers in Cairo told The National on Tuesday that they are not following the government's warning, and are instead basing their prices on the market, setting up a potential showdown with the authorities.

The government had attempted to bring down prices of bread by increasing its supplies of flour, after receiving an injection of cash from several international financing deals, bringing the price of flour down by between 15 and 25 per cent, depending on the flour’s quality.

The drop in flour price should have brought down the price of non-subsidised loaves by a similar amount, according to a Sunday television statement from Abdullah Ghorab, the head of the bakeries union at the Federation of Egyptian Chambers of Commerce.

Mr Ghorab promised that the drop in flour prices would be reflected in the price of loaves once the Eid Al Fitr break was over on Monday.

However, The National visited several bakeries on Tuesday and found that, across the board, the price of a loaf of free market bread, which is known as “tourists’ bread” on the Egyptian street, had not come down.

A number of bakers said they had no plans to lower prices despite repeated calls from Mr Ghorab's bakeries union, a private sector entity made up of industry leaders that works with the government to administer the country’s bakeries.

“I have not brought down the price of bread in my store because I am still baking it with flour purchased before prices came down. When I finish the batch I have, I will look into bringing down the price,” said Ali Hamed, 51, a baker in Cairo’s Hadayek Al Qubba district.

However, Mr Hamed refused to provide exact dates of his past flour deliveries or a date for when his customers can expect lower prices.