Egypt Families Face Rising Costs as Middle East Conflict Drives Up Fuel Prices

Egyptian families are struggling with steep price increases for food and basic necessities after the government raised fuel costs due to a regional conflict. The price hikes come during Ramadan, making it especially difficult for low-income families to afford traditional holiday purchases.

CAIRO (AP) — Already earning less than $100 monthly to support his family, Sayyed Ragheb now faces an even tougher financial situation following Egypt’s decision to increase fuel costs amid regional warfare.

The father of four children who attend school picks up work at coffee shops and construction sites to make ends meet. With meat and vegetable costs spiking in recent days, he’s concerned about providing for his family’s essential needs.

“This means a price increase for everything,” Ragheb commented while serving beverages at a Cairo coffee shop during a recent evening shift. “This is catastrophic for someone like me.”

Among Middle Eastern nations, Egypt remains one of the few countries not directly impacted by the ongoing conflict, which has entered its third week with no resolution in sight. The country isn’t participating in the U.S.-Israeli military operations against Iran, nor has it faced Iranian missile attacks like Gulf states or Israeli strikes like Lebanon.

However, the nation’s 108 million residents are experiencing indirect consequences from the fighting. Rising energy costs have compelled officials to dramatically increase prices for government-subsidized fuel and cooking gas.

This price adjustment is creating a cascading impact throughout Egypt’s already weakened economy. The timing is particularly challenging as it coincides with Ramadan, when families typically host large evening meals, and precedes Eid al-Fitr celebrations, a significant shopping period for new clothing, particularly children’s garments.

Global energy costs have climbed sharply since U.S. and Israeli forces began their campaign on February 28. Iran responded by targeting oil and gas facilities throughout the Persian Gulf region and essentially halting passage through the Strait of Hormuz, a waterway handling one-fifth of global oil trade.

Brent crude prices jumped from under $70 per barrel on February 27 to nearly $120 by early March 9. Wednesday’s trading showed prices around $104.

This increase particularly burdens Egypt since the government allocates substantial portions of its already tight budget to subsidize gasoline, fuel, and electricity costs.

Energy expenses aren’t the country’s sole concern.

Suez Canal revenue, a crucial government income source, had begun recovering following two years of Houthi rebel attacks on Red Sea shipping routes. However, some shipping companies are once again avoiding Middle Eastern routes due to current instability, with officials anticipating additional financial losses.

Egypt’s tourism industry, which generates significant foreign currency from visitors to ancient pyramid sites, expects dramatic decreases as travelers avoid the region.

Should the conflict continue driving up costs while reducing government income, short-term economic difficulties could evolve into broader political and economic turmoil, according to Alexandra Blackman, a Cornell University Middle East politics specialist.

“That will be more challenging for the regime to manage and control,” she explained.

Government officials announced March 10 price increases of 15% for gasoline, 22% for cooking gas, and 17% for diesel fuel commonly used in commercial and public transportation.

President Abdel-Fattah el-Sissi recognized the burden on citizens but described the increases as “inevitable” and “the least expensive” approach to safeguard the economy.

“The requirements of the reality sometimes necessitate taking difficult measures … to avert harsher options and more serious consequences,” el-Sissi stated during a weekend Iftar gathering, the daily meal breaking Ramadan’s sunrise-to-sunset fast.

He noted that Egypt’s annual oil product consumption costs $20 billion, including fuel for power plant operations.

According to Petroleum Minister Karim Badawy, the government must import 28% of gasoline requirements and 45% of diesel needs, creating budget strain.

Officials announced several measures to reduce impact, including cutting official international travel and limiting fuel use across government departments. Salary increases beginning in July were also announced.

Egypt’s lower and middle-income populations have already experienced reduced buying power over the past decade due to government cost-cutting policies. These included subsidy reductions and currency devaluation as components of a comprehensive 2016 reform initiative.

Official data shows inflation rose from 10% in January to 11.5% in February this year. Price increases are spreading throughout the economy in a nation where government statistics indicate one-third of residents live below the poverty threshold.

Following the new fuel pricing implementation, meat costs have increased 25% while fruits and vegetables rose 15-30%, according to vendors at three Cairo marketplaces.

Hussein Rashad, who operates a grocery store in a lower-income neighborhood, reports customers have become more choosy, with most reducing vegetable purchases. Some have eliminated fruit buying entirely, he noted.

“Many things have become out of their reach,” he observed.

Ragheb, the coffee shop employee, explained his family has restricted spending, including switching to the most affordable food basics. He won’t purchase new clothing for his children for the approaching Eid celebration.

“One has no other option,” he concluded.