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In Egypt, economic heat of Russia's war in Ukraine is only getting worse

Average Egyptians told Al-Monitor that everything from the price of tomatoes to bread is taking a toll on daily life and household decisions as country's economy reels under the heavy toll of the war in Ukraine.
People walk past a fruit seller's stall in the Azhar district of Cairo

GIZA — With every passing day, the money in Hanan Hussein's purse becomes more and more dwarfed by the items in this crowded vegetable market in Embaba — a densely populated neighborhood in the Giza province of Greater Cairo.

Hussein, a mother of two in her early 50s, looks at the price tags of food items placed on the carts or on the wooden tables jockeying for limited space on both sides of the market and shrugs her head, knowing that the few pounds she has can only buy a few of the items on display.

"Tomatoes selling for 10 pounds a kilo, potatoes for 12, zucchini for 15 and rice for 19," she says to herself.

"What are these prices?" she asks herself as she moves toward the end of the market.

Hussein passes by the shops selling fish, meat and chicken but pays no attention to them.

When she reaches the end of the market, she turns back and starts a new journey through the vegetables and fruit on display, hoping to come across something she can buy.

"We can't afford these high prices," Hussein told Al-Monitor, pointing at the vegetables in front of her. "I am looking at all the items on my shopping list, but it looks like I can't buy any."

Tens of millions of Egyptians, especially the poor and the middle class, are affected by the economic repercussions of Russia's war on Ukraine.

Al-Monitor/Premise poll released this month found 68% majority of the population in Egypt, Turkey, Yemen, Tunisia and Iraq worried about their ability to access food in the coming months.

Having initially deprived the Egyptian tourism sector of billions of dollars in revenues, with Russians and Ukrainians constituting a third of annual tourist arrivals, the war has caused food import-dependent Egypt to pay more for its imports, especially cereals such as wheat and maize, according to the World Economic Forum.  

Disruptions caused by the war on the international supply chain are also translating into a higher price for industrial and agricultural production requirements in a country where dependence on imported production essentials is very high.

Egyptians are feeling the pinch, with price increases in shops and markets across the country.

Hussein has stopped buying fish, chicken, meat and table condiments, among other items.  

So has Alaa Mamdouh, a civil servant in his mid-30s who has one child.

Like many Egyptians, Mamdouh has decided to take on a side job to supplement his income. However, with less than 4,000 Egyptian pounds (less than $133) from both jobs, he can't manage.

"I don’t know what to do," Mamdouh told Al-Monitor. "People like me can't keep going with food prices assuming new heights every day."

Other Egyptians are complaining about their income being dwarfed by growing commodity prices.

Deep beneath their suffering is an inflation rate that is hitting an all-time high, threatening a political and security backlash.

Fears from this backlash have prompted Egyptian President Abdel Fattah al-Sisi to assure the public that things are going to be alright.

"I know that some people are worried, and they have reasons to be concerned," the Egyptian leader said Jan. 6 after entering a large church in the New Administrative Capital, a new megacity he is constructing in the desert, to congratulate his country's Coptic Christians on Christmas. "But you have to be sure that God will not fail us," he added.

Two days later, he asked Egyptians not to buy into the uninformed rhetoric of those who spread fear about national economic conditions.

"We did not enter wars or squander the wealth of our country," Sisi said. "Egypt did not cause these conditions."

As he spoke, the Egyptian pound continued to lose its value to the US dollar, the main import currency in this country — at the time of writing selling at 30 pounds per dollar.  

Egypt has had to depreciate its national currency two times since February 2022, says Al-Arabiya News.

It scrapped its managed exchange rate regime a few days ago in light of an agreement with the International Monetary Fund and as part of other measures that will also include the elimination of energy subsidies and the withdrawal of the state from economic activities.

A cheaper pound weakens the purchasing power of people like Hussein and Mamdouh and stagnates the business of people like fishmonger Ahmed Hamdi, who sat outside his shop in the same market in Embaba where fish prices filled passersby with aversion.

"People come here only to ask about prices, but nobody buys anything," he tells Al-Monitor.

Some fellow traders closed down their shops due to sales spiraling downward and losses spiraling upward, he says. "I may do the same if things get worse."

To reduce the intensity of the downturn, the government has opened dozens of outlets where food is sold at a discount. It also increased food subsidies for tens of millions of people registered in the national food rationing system, according to Daily News Egypt.

Economists say, however, that these efforts will not pay off without proper market control.  

"Traders use current conditions to amass huge wealth by increasing monopolies and raising prices," director of think tank Capital Centre for Economic Studies Khaled al-Shafie told Al-Monitor. "This requires strong supervision over the market."

The lack of this supervision caused a traditionally reticent parliament to grill the minister of supply a few days ago.

Parliament members criticized the minister for his failure to control runaway commodity prices.

"The minister does nothing to prevent traders from exploiting the poor," parliament member Nafie Abdelhadi told Al-Monitor. "Commodity prices are rising dramatically, but the minister is only watching."

This leaves people like Hussein in limbo. Every day, she faces the riddle of matching the little money in her purse with the needs of her family.  

"It is a new, difficult test every day, but I am sure God won't forget us," she says.

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