Egypt.. Significant Increases in Prices of Goods, Cars, and Building Materials with the Decline of the Pound Against the Dollar

Dubai, United Arab Emirates - The prices of basic commodities, building materials, and cars in Egypt have risen due to the depreciation of the pound against the dollar. The price of a ton of steel increased by 2500 pounds ($84.61), and cement rose by 100 pounds ($3.38). The percentage increase in car prices varied among different models, amid a shortage of basic goods.

Traders linked the movement of commodity prices in the coming period to the dollar's exchange rate, which will be determined by the government's ability to secure foreign currency. For the second consecutive day, the pound's exchange rate fluctuated against the dollar, starting on Thursday with a jump in price to exceed 30 pounds again, before closing at 29.65 pounds for buying and 29.74 pounds for selling, according to data from the Central Bank of Egypt.

Ahmed El-Wakeel, head of the Alexandria Chamber of Commerce, stated that there has been a shortage of some goods in the local market recently due to irregular imports of goods and production requirements, affected by the lack of available foreign currency, which impacted the coverage of imports from abroad. El-Wakeel added, in statements to Afaaq News in Arabic, that the release of some goods that were stuck at ports has led to a relative improvement in the availability of products in the market, and this improvement will continue and reflect in the market within two weeks, provided that banks continue to secure foreign currency for importing goods from abroad.

According to an official statement, the government released goods worth more than $1.5 billion during the first 10 days of January, raising the total value of released goods to 8.5 billion pounds since the beginning of December. For his part, Hisham El-Degwi, head of the Foodstuffs Division at the General Federation of Chambers of Commerce, downplayed the significant impact of the dollar's recent rise against the pound over the last two days on food prices, as major companies price goods according to the parallel market rate of the dollar at 38 pounds. He also pointed to the role of the "Ahlan Ramadan" exhibitions organized by the Federation of Chambers of Commerce in cooperation with the government to provide food products at reasonable prices for citizens.

Al-Dajwi added, in statements to Afaq News in Arabic, that the "Welcome Ramadan" exhibitions were held this year in January, two months before Ramadan, and more than one exhibition was held in all governorates of the republic. In Giza governorate alone, there are 15 exhibitions, where all basic goods are available at attractive discounts for citizens. He noted that the Federation of Chambers of Commerce bore the cost of organizing the exhibitions to facilitate their establishment in all governorates and to give exhibitors the opportunity to display prices with discounts ranging from 30-35% below market price. In turn, Ahmed El-Zini, head of the Building Materials Division at the General Federation of Chambers of Commerce, stated that the prices of building materials recorded their first price increase of 10% in the new year on Wednesday, due to the depreciation of the pound against the dollar, causing the price of cement to rise by 100 pounds ($3.38) per ton, and the price of iron increased by 2500 pounds per ton ($84.61), with the price of a ton of iron being sold for more than 25,000 pounds ($846.04) at the factory gate. He added that the price increase is natural due to the increased costs for manufacturers after the rise in dollar prices, which raises the cost of importing raw materials.

Companies such as Ezz Steel, Suez Steel, and Egyptian Steel have informed their agents of an increase in iron prices by 2500 pounds ($84.61) per ton, according to local media. El-Zini downplayed, in exclusive statements to Afaq News in Arabic, the impact of rising building material prices on sales volume due to the state's continued implementation of massive national projects across the country, which consume large quantities of building materials, in addition to the ongoing projects by real estate development companies. He also pointed out that the production volume of building material factories has decreased due to the lack of production requirements and the high cost of financing.

Local consumption of rebar increased by 15% to reach 6.017 million tons during the first 9 months of 2022 compared to 5.150 million tons during the same period in 2021, and national projects maintained their consumption rate, according to a report by Ezz Steel. Osama Abu El-Majd, head of the Car Dealers Association, stated that car prices in Egypt have risen by more than 100% since the depreciation of the pound against the dollar last March, linking the continued price increases in the coming period to the dollar's price in banks, which is witnessing daily increases against the pound.

In recent days, several agents have raised car prices in Egypt by varying amounts, the latest being the increase by Al-Mansour Automotive - the local agent for Chevrolet, Opel, and MG - with prices for the latter increasing by between 40,000 to 60,000 Egyptian pounds (1353.66-2030.49 USD), and for Opel by between 80,000 to 110,000 Egyptian pounds (2707.32-3722.26 USD), according to local media. Abu Al-Majd added, in statements to Afaq News in Arabic, that the car market in Egypt is still experiencing a shortage in supply, despite the enactment of a law that provides facilities for Egyptians abroad to import cars exempt from taxes and customs, which has not achieved its intended purpose due to two factors; the first: the law requires the deposit of the amount to be paid at least three months prior to the transfer, with only a bank statement from the account from which the amount is transferred being sufficient, and this condition has been canceled after consulting with the government, and the second: Egyptians residing in the Gulf do not benefit from tax exemptions due to the lack of a tax exemption agreement with Gulf countries, despite the fact that the largest Egyptian community resides in these countries.

Egyptian President Abdel Fattah El-Sisi approved, on October 28, a law that grants some facilities for the import of cars for Egyptians residing abroad, as part of the state's efforts to increase remittances from Egyptians abroad, which represent one of the most important sources of foreign currency for the country. Osama Abu Al-Majd pointed out that the increase in car prices has negatively impacted sales volume, which recorded a decline rate of up to 50%, the largest decline rate in sales in the history of the car market, in addition to the supply shortage contributing to this significant drop in sales.

Car sales of all types in Egypt have declined to record 176.9 thousand vehicles during the first 11 months of 2022 compared to 261.5 thousand vehicles during the same period in 2021, a decrease of 23.39%. In November alone, sales of passenger cars recorded only 5.2 thousand cars, a decrease of 73.6% compared to the same month of the previous year, according to a report issued by the Automotive Market Information Council "AMIC."