Food prices decline globally, rise in Egypt

According to the World Bank’s September Food Price Watch report, global prices of internationally traded foods dropped by six percent between April and August 2014, hitting a four-year low and overturning price increases in the previous quarter. 

The report attributes the price drop largely to sharp decreases in grains, fats and oils. Notably, international wheat prices dropped by 19 percent between April and August, while maize fell by 21 percent. Rice, on the other hand, rose by 13 percent.

The Bank is projecting record wheat and corn harvests for 2014, due to high production and favorable weather forecasts. Rice harvests are also expected to be high, but export restrictions in India and Thailand have kept prices from falling in response.

Overall, the report is good news for Egypt’s government, which is heavily dependent on food imports to feed its citizens. The country is the world’s largest wheat importer, and subsidized flat bread is a staple food for much of the population. Low grain prices and steady availability of commodities ease the burden on the Ministry of Supply.

A 2007-2008 spike in global grain prices sent Egypt’s bread prices skyrocketing, and ultimately lead to riots over scarce subsidized bread. Some experts also believe that rising grain prices in late 2010 contributed to Egypt’s 2011 uprising.

However, the news may not mean much to the average Egyptian household, for whom food makes up 40 percent of expenditure. Local consumers have been hit hard by food-price inflation, which has ramped up in the wake of fuel subsidy cuts this summer.  According to state statistics agency CAPMAS, the food and beverage inflation index recorded an annual increase of 11.6 percent in August.