Govt increases cooking gas prices, prompting new inflationary spike

In a Sunday decision, the government increased prices for household cooking gas canisters, effective Wednesday morning, to LE150 for a 12.5 kg canister and LE200 for a 25 kg canister, a hike of 50 percent and 33 percent, respectively.

Several canister distributors in Greater Cairo told Mada Masr on Wednesday that the canisters are already trading for LE150 each at depots, with retail prices reported between LE165 and LE170. The canisters were previously trading at LE105 to LE110.

Home delivery prices are nearing LE200, the distributors said. "I still add LE20 to 30 for fuel costs, which have gone up, and delivery," one of the distributors told Mada Masr. Each time canister prices rise, the source said, the government cracks down on distributors, accusing them of theft and confiscating their vehicles.

Half of Egypt’s households depend on gas canisters, the prices of which surged by 1775 percent over the past decade. Egypt consumes around 4 million tons of butane gas annually, commonly known as cooking gas, and imports a significant amount to meet domestic demand.

The decision will rapidly fuel inflation, a financial analyst at a finance consulting firm told Mada Masr on condition of anonymity. The analyst noted that the new prices will have an immediate impact on consumers, and will cause knock-on price increases in some goods.

Informed sources told Mada Masr that the government decided to spread out the increases in goods and services prices over the year to distribute the inflationary impact, starting at the beginning of the current fiscal year. 

The government has increased the prices of gasoline, diesel, electricity, subsidized bread and metro tickets since January.

According to data from the Central Agency for Public Mobilization and Statistics, inflation in the "electricity, gas and other household fuel materials" category reached 15.5 percent year-on-year  in August.

Several poultry farmers told Mada Masr that gas canister cost increases will further raise poultry prices, especially with the onset of winter, as farmers rely on gas and diesel canisters for heating.

Commercial bakeries are also planning to raise bread prices by LE0.5 to LE1 starting next week, as they exhaust their stock of gas canisters and begin buying them at the new rates, three sources in the commercial bakery sector told Mada Masr. Following the anticipated hike, the price of a commercially sold loaf will range between LE2 and LE3, the sources said.