Egypt raises fuel prices by 9-22% to align with global market, currency reforms

The Egyptian government announced on Thursday an increase in fuel prices by between 9-22%, citing rising global oil prices and the recent liberalization of the Egyptian pound’s exchange rate.

The decision, implemented by the Egyptian Petroleum Pricing Committee, reflects adjustments across various fuel types. The price of 80-octane petrol will rise by EGP 1 to EGP 11 per litre, while 92-octane and 95-octane petrol will increase by EGP 1 each to EGP 12.50 and EGP 13.50 per litre, respectively. Diesel prices will see a steeper hike of EGP 1.75 to EGP 10 per litre. Additionally, the cost of a butane gas cylinder will rise by EGP 25 to EGP 100.

This move comes amidst a backdrop of rising global oil prices fueled by factors like the ongoing conflict in Ukraine and the post-pandemic economic recovery. Earlier in March, the Central Bank of Egypt (CBE) took a two-pronged approach to address pressing economic challenges. The bank opted for a free float of the Egyptian pound, severing its peg to the US dollar, and raised interest rates by 6%.

For years, the Egyptian government heavily subsidized fuel prices. However, the recent surge in oil costs has made sustaining these subsidies increasingly difficult. The government maintains that the price adjustments are necessary to alleviate the strain on the state budget and ensure continued fuel availability within the country.

The impact of these price increases on the Egyptian economy is likely to be multifaceted. While businesses might pass on the additional costs to consumers, leading to inflation, the government hopes to see a reduction in the budget deficit, freeing up resources for investments in education and healthcare.

The government has pledged to shield vulnerable populations from the brunt of these price hikes. Measures include increased social welfare payments and subsidies for public transportation to ease the burden on low-income earners.

The average price of the US dollar in the market reached EGP 46.6231 for buying and EGP 46.7231 for selling, according to the CBE.