Egyptians bear down under worst inflation in a decade

Egyptians are bearing down under their worst inflation in a decade, cutting spending as much as possible as prices surge on basic food items, transport, housing, and even some essential medicines.

Inflation reached almost 30 percent in January, up five percent over the previous month, driven by the floatation of the Egyptian pound and slashing of fuel subsidies enacted by President Abdel-Fattah el-Sissi in November.

The move was part of a reform package to secure an IMF bailout loan of $12 billion desperately needed to shore up investor confidence and overhaul the economy. Immediately after the floatation, the pound lost over half its value, making a wide range of Egypt's many imported goods double in price.
 

In the months since, Egyptians have been left with a grim search for ways to tighten their belts and make ends meet, hoping eventually the promised benefits of reform like growth and job creation come.

There's little public outlet to voice discontent, with opposition and dissent in general crushed, and alternatives to el-Sissi's rule unfathomable for most. Many fear saying anything negative about the country in public.

"People are buying half of what they did before, because it's gotten very expensive," said Hassan, a butcher who only gave his first name for fear of creating too much attention.

Food and drinks have seen some of the largest increases, costing nearly 40 per cent more since the floatation, figures from the statistics agency show. Some meat prices have leaped nearly 50 per cent.

"They're buying less than before. Instead of buying five or six items they'll buy two, for example," said a grocery clerk, Ismael, who gave only his first name for similar reasons. "No one knows what the prices will be next. But hopefully tomorrow things will get better."

Egypt had little alternative to the reforms.

The economy has yet to recover from the 2011 Arab Spring uprising that overthrew longtime autocrat Hosni Mubarak. Investment and tourism, a pillar of the economy, were both gutted by political turmoil and terror attacks.

Keeping the pound's value high artificially was draining foreign reserves at a time of waning largess from Saudi Arabia and Gulf Arab allies, who propped up el-Sissi's Egypt with tens of billions of dollars after he led the military's ouster of his Islamist predecessor, Mohammed Morsi, in 2013. Paying for subsidies also sucked up much of the budget.

Reforms were long avoided by Egypt's leaders for fear of a popular backlash like the 1977 bread riots that forced the reversal of food subsidy cuts.