Egypt has been struggling with rising inflationary pressures, driven by the falling value of the pound, then its floating, as well as energy subsidy cuts, part of a fiscal reform plan that began in 2014.
Annual inflation has reached its highest point in eight years and is set to continue to rise.
The Egyptian currency was floated in November in the lead-up to receipt of a US$12 billion loan from the International Monetary Fund aimed at decreasing the budget deficit and public debt. The immediate outcomes of the decision were a steep devaluation of the pound and further price increases. The full implications on quality of life and broader living conditions across classes are however yet to unfold.
Figures from the state statistics agency CAPMAS indicate more than 25 million Egyptians were living below the poverty line in 2015.
The CAPMAS-led 2015 Household Income, Expenditure and Consumption Survey noted that the official poverty line rose from LE326 per month in 2012/13 to LE482 per month in 2015, to reflect a rise in the minimum income sufficient for a dignified life. This means that a family of five needed a monthly income of LE2,410 in 2015 to remain above the official poverty line.
The survey also highlighted the disparity in spending power between the poor and the wealthy. Spending by the top 10 percent of earners amounted to 25 percent of the national total, while the poorest decile’s share of spending amounted to just 4.2 percent of total consumption.
Furthermore, over three quarters of the top spending bracket have smart cards entitling them to subsidized goods, while 82 percent of the poor do not benefit from Egypt’s social insurance program.
Spending patterns also differed between the poorest and wealthiest Egyptians. The survey found that households in the bottom 10 percent spent around 47.7 percent of their income on food and beverages, compared to 22.6 percent among the upper income bracket. Spending on alcohol and tobacco amounted to 5.8 percent of income for the lowest earners, compared to 2.7 percent among the highest earners.
This means that food price increases and excise taxes on tobacco have a greater impact on poorer households.
Egypt’s poorest citizens spend almost twice as much on Value Added Tax (VAT) as a percentage of their incomes as its richest, according to a report by the Egyptian Initiative for Personal Rights (EIPR).
Ahmed (“Bepsi”) earns LE1,250 after five years working at Bisco Misr Company in Cairo. He works at the company from 2 pm until 10 pm, and for the last couple of years worked an additional job as a hotel security guard from 11 pm to 7 am to increase his income. But working two jobs back to back was unsustainable. “It left me drained and hungry for rest,” Bepsi explains. “I could not keep it up, so now I make do with my meager wages from the company.”
After rent, food and transport, Bepsi’s next greatest expenditure is utility bills, which can range from tens of pounds to hundreds, he says.
Some months, these expenses leave Bepsi indebted.
Regarding changes in eating habits: “We used to be able to buy a serving of foul, falafel, or aubergines for LE1, but since the floating of the pound, the smallest serving costs LE1.50. Also the smallest plate of koshary used to cost LE3, and now costs LE5. This is all we can afford, and its becoming increasingly unaffordable.”
“As for meat, this is a luxury that I cannot afford. I sometimes buy chicken bones, and meat bones for use in soup.”
Bepsi worries about his future healthcare expenditures costs. “I’m 29 years old now, but I feel like an old man who is growing increasingly weak. I will soon need more money for healthcare.”
Tamer, married with three children, earns around LE1,200 (minimum wage) at the Misr Spinning and Weaving Company in Mahalla, where he has worked for 18 years.
His wages are not enough to make ends meet and due to increasing prices over the past several months, he took on a second job working as a toktok driver, from which he earns around LE400.
“I work from 3.30 pm to midnight at the company, then I work for a couple hours after work driving the toktok just to make ends meet,” Tamer says.
The family’s three greatest expenditures are rent, followed by utility bills, then private tutoring for two of the three children (around LE180)
“We almost never consume red meat, as I am simply unable to afford it,” Tamer says.“We may eat it once a month if we are invited to dinner at a family gathering. Otherwise our daily meals consist basically of beans, pasta, potatoes and rice. I try to provide at least small portions of chicken or fish once a week, but we cannot afford to buy it any more often than that.”
Tamer worries about healthcare expenses. “If one of us falls ill and has to go to the doctor, that’s LE80 for a visit apart from the cost of medicines and antibiotics for the kids.”
Om Ahmed is a widowed cook in her 50s. She lives in the area of Ard al-Lewa in Cairo and helps support her two daughters and son — who are all married and struggling financially — and her five grandchildren. Om Ahmed has three regular weekly customers from which she makes up to LE1,500 a month, and some weeks she gets additional work for LE200-300.
Her three highest costs are food, heart medication and bills. The bills have more than doubled in the past few months, with electricity having gone up from an average of LE40 to LE100.
Om Ahmed has had to give up on items that her children and grandchildren like, including meat and chicken. “Thank God at the end of the day we don’t go hungry, but sometimes you want to give more to your children,” she says. She used to take the kids on outings every couple of weeks but can no longer afford to do so. Neither can she buy them clothes, and she now buys pampers one by one rather than a full bag.
She also now sometimes has to only get the most essential medication prescribed for her heart condition and skip the others.
Mostafa is a 30-year-old owner of two gift shops in Hussein and Rehab. He is married with two boys, one five years old and the other two years old.
Mostafa doesn’t have a fixed salary, but his monthly income is about LE4,000-5,000. He tried to look for another job to supplement his income, but running two shops took up all his time.
The family’s three greatest expenditures are the children’s needs (milk, pampers, medicines, etc.), instalments and gas for the car.
They can no longer buy toys for the children and clothes only when absolutely necessary.
“Me and my wife try to make it so that the kids can’t feel the hardship, we are facing it ourselves by giving up on what we need for their sake,” Mostafa says. The only outings they make are for the children and they can’t do this often.
Mostafa worries about difficult decisions they may have to make in the future. “I am exhausted and doing all I can. My back is already against the wall.”
Riyad and his wife both suffer from chronic diseases and need continual treatment.
Their joint income is LE7,000 a month, made up of both their salaries — he is a journalist, and his wife a teacher — and the interest on a bank account. They are unable to find ways to increase their income.
Health costs take up half their income. Their two other greatest expenses are transport and electricity bills.
Now they are not able to eat out more than twice a week, they buy their household needs once a month rather than every two months.
“We had wanted to use our savings to buy a car,” Riyad says. “But the prices for cars have gone up by about 300 percent and prices of everything else have gone up too.”
Ahmed is a software developer, married with one eight-year-old boy. His income range is LE10,000-15,000.
He is trying to find other ways to increase his income, but has not managed to yet.
Most of his income is taken up by food, transport, and school tuition. The family have stopped ordering in food and do not eat out at restaurants. They can no longer buy the household supplies for the whole month at once as they were accustomed to doing. Toys for their son are also out of the question, unless it is an occasion such as Eid.
Taking his son out of a language school and enrolling him in a government language school is the most difficult decision Ahmed has had to make so far.