The Egyptian bakery sector is facing increased production costs due to rising prices of key ingredients such as flour and sugar. According to Khaled Fikri, head of the Egyptian Bakery Association, the price of a ton of flour has increased from 4,000 to 4,500 Egyptian pounds. This surge has led to a 12.5% increase in the production cost of tourist bread, also known as free-market bread.
The proposed price increase has been delayed for a week to allow for a more accurate calculation of production costs. Fikri stated that the increase will be based on the latest data and not calculated weekly. He also noted that implementing a precise price increase is challenging due to the absence of a 25 piastre denomination, making it difficult to achieve the exact increase.
As an alternative to raising prices, bakery owners are considering reducing the weight of bread. Fikri explained that every 10 grams of bread is equivalent to 25 piasters, or a quarter of a pound. For instance, an 80-gram loaf of bread is equivalent to two pounds. Reducing the weight of bread by 10 grams would decrease its size but is seen as a more favorable option than increasing prices.
The Egyptian government has urged bakery owners to balance their interests with those of consumers. Fikri emphasized that bakery owners are committed to adhering to the Ministry of Supply's pricing and timing regulations. Any non-compliance with these regulations would result in legal consequences and penalties.
Tourist bakeries bear additional costs related to labor, as their production process requires specialized skills, leading to higher wages. Despite producing less than subsidized bakeries, these bakeries incur higher labor costs. Fikri stressed the importance of finding a balance between the interests of bakery owners and consumers.
The price of sugar, another essential ingredient, has also increased from 25 to 27 Egyptian pounds. This change necessitates a comprehensive recalculation of production costs before any new price increases are announced. The bakery association is working to ensure that any decision regarding prices takes into account the interests of both parties.
Fikri concluded that the goal is to find a mutually beneficial solution, ensuring that neither bakery owners nor consumers are adversely affected. The sector aims to achieve a balance between the interests of all stakeholders, given the current economic conditions. The association will continue to work with the government to find a fair solution.
Key points
- The Egyptian bakery sector is proposing to reduce the weight of bread instead of raising prices amid rising production costs.
- The price of flour has increased from 4,000 to 4,500 Egyptian pounds, leading to a 12.5% rise in production costs.
- The sector aims to balance the interests of bakery owners and consumers in the face of economic challenges.
