Budgeting Ramadan: Tradition Meets Economic Realities
Updated 3/5/2024 8:00:00 AM
As the holy month of Ramadan draws near, Egyptians are grappling with a complex economic reality. Soaring inflation is squeezing household budgets, forcing many to adjust their Ramadan traditions.
Adding to the concerns is the ongoing sugar dilemma, marked by escalating prices and shortages in some areas.
While the government is taking measures to address these issues, concerns remain.
Inflation in Ramadan: From Simpler Iftars to Fluctuating Prices
The monthly inflation rate in Egypt rose to 1.7% last January from 1.2% in December 2023, according to data by the Central Agency for Public Mobilization and Statistics (CAPMAS).
As for the food and beverage prices, they recorded a month-on-month (MoM) increase of 1.3%.
Wessam, a 28-year-old housewife, tells Arab Finance: “Despite the current prices, I am still planning to host my family for Iftar this year, but I will try to keep it simple. I think that is what everyone should do.”
Additionally, the prices of several products fluctuate frequently ahead of Ramadan. Ahmed, an engineer and owner of a chain of supermarkets, explains to Arab Finance that these fluctuations in product prices “are a matter of supply and demand, with prices currently missing stability.”
Meanwhile, Safaa, a 50-year-old housewife, shares that “the quantity of meat on tables this Ramadan will decrease. If a family brings to its table three dishes for Iftar, it will be cutting this amount this year because of different financial circumstances compared to the previous years.”
In late February, Deputy Minister of Supply and Internal Trade Ibrahim Ashmawy revealed his expectations on commodity prices for the coming period, specifically before and during Ramadan, in an interview with “El-Hekaya” talk show on MBC Masr.
“The fall in prices takes some time due to the natural cycle of commodities, even if speculation on the dollar ends and the exchange rates depreciate in the parallel market,” Ashmawy said.
On the other hand, the consumption of people during Ramadan could impact the inflation rate.
Nirmeen El Sayyad, UN Women Project Manager at the American University in Cairo (AUC) and an economic expert, expects "an overall relative slowdown in inflation rates, especially after the Ras El Hekma deal, which could help stabilize market prices.”
“Some price increases are still expected, although not to the extent seen in previous years," El Sayyad adds.
Meanwhile, Hanin El-Mahdy, an economist and asset management consultant, explains that “we experience seasonality annually, with higher-than-usual monthly inflation in Ramadan as demand usually increases. And this represents the normal scenario.”
“However, this year, we are experiencing a different scenario as inflation mainly comes from the supply side due to currency instability, with merchants pricing their goods based on the USD exchange rate in the parallel market,” El-Mahdy notes.
El Mahdy elaborates that “the increase in prices has affected the purchasing power of the lower classes. But, in some cases, demand is still high among middle-class consumers, as they fear to experience goods run-out.”
“Demand is likely to remain high in Ramadan like every year, with inflation to decline given currency stability in the parallel market. However, inflation is likely to narrow down with lower-than-usual magnitude,” El Mahdy anticipates.
Egypt Grapples with Sugar Challenges Ahead of Ramadan
Egypt has been facing challenges concerning the prices and availability of sugar lately. CNBC Arabia reported last February that sugar prices increased by up to 100%, being unavailable in some markets. This led to overcrowding in shops and commercial chains.
The government has already initiated efforts to meet demands for sugar in the local market, particularly during Ramadan.
In January, the Ministry of Supply announced daily monitoring of sugar cane supply rates from farmers, sugar manufacturing operations, and distribution methods.
The ministry also highlighted that the seven factories are expected to receive up to 7 million tons of sugar cane for the production of 700,000 tons of sugar, adding that 1 ton of sugar cane produces up to 100 kilograms of sugar only after pressing it.
However, Wessam says "we gave away Ramadan bags this year; however, we could not provide sugar for all as some of the bags included sugar, while the rest did not. And, of course, the soaring prices of meat and chicken forced us to drop them all together from the bags."
Meanwhile, Safaa states that “there is no shortage in sugar supply; it is available. However, merchants sell it for over EGP 50. The government offers sugar at EGP 27 per kilo, but a family can buy only a kilo or two, making it inaccessible for some.”
Ahmed clarifies that “there is no current shortage in sugar as it is being sold at its official price.”
“However, to purchase a kilogram of sugar, customers have to buy any other goods alongside, regardless of the quantity of the goods,” Ahmed further explains.
“Supermarkets can offer up to 2 kilograms of sugar for sale at a stricter limit if the customer makes not less than EGP 600 worth of purchases. It is also possible to provide 3 kilograms for each citizen if their purchases exceed EGP 1,000,” Ahmed adds.
He points out that this move aims to deter consumers from buying excessive quantities of sugar for storage or distribution purposes.”
Meanwhile, a head of a state-run outlet, who requested anonymity, states that “the main cause of the sugar crisis is excessive purchasing activity by the end consumer when sugar is readily available. Therefore, we are currently implementing a policy of rationing by offering each citizen one kilogram, no more, to mitigate the crisis.”
Additionally, El Mahdy expects “a decline in the prices of strategic goods during Ramadan following the Egyptian government’s decision to mandate price labeling on goods, including sugar. This is a type of price control.”
“I believe that the real problem regarding this commodity is not its supply, as shortages are not evident, but rather stems from distribution problems, attributable to mismanagement,” El Mahdy assumes.
Ramadan Shopping Concerns Ease
As for other products’ availability, both Ahmed and the anonymous head of the government outlet agree on the availability of all products in stores.
They emphasize that groceries, including dried fruits, nuts, sugar, cooking oil, and rice, are particularly in high demand during Ramadan and beforehand.
Supply is poised to meet demand when the economy secures foreign currency. El Sayyad asserts that “as the economy moves towards the equilibrium point and stabilizes with the expected inflows in dollars, it will help traders secure and meet the demand for products, especially with the banking sector providing the needed amount of forex for international trade purposes."
“This will definitely elevate supply levels and contribute to stabilizing commodity prices,” El Sayyad adds.
Moreover, El Mahdy highlights that “Ramadan fairs established under the government’s supervision will contribute to cutting off prices of strategic goods.”
“The government must ensure an excess supply during this month to meet demand. Consumers will continue to demand these strategic goods at the usual rate if they consistently find them at lower prices,” El Mahdy says.
As Ramadan approaches, Egyptians are navigating a complex economic landscape marked by inflation and an ongoing sugar crisis. While these challenges undoubtedly impact traditional celebrations and household budgets, the spirit of resilience still shines through.
By Sarah Samir
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