A source has revealed that Egypt’s fuel price indexation committee could raise the price of diesel, the largest portion of the country’s fuel bill, by 5% in July.
The price rise will determine prices for the new fiscal year. The government raised the price of petrol in the local market by EGP 0.25/litre, effective from 23 April, an increase of less than 5%.
The rise means that fuel prices in Egypt now stand at: EGP 6.50/litre for 80 octane gasoline; EGP 7.75/litre for 92 octane gasoline; and EGP 8.75/litre for 95 octane gasoline. Crucially, however, the price of diesel was left unchanged at EGP 6.75/litre.
Naeem Research sees that the impacts of the move are likely to have minimal effects on inflation, as well as from a fiscal angle. The announcement comes on the back of oil prices having surged by 35% quarter-on-quarter (q-o-q), averaging $61/barrel in the first quarter (Q1) of 2021, raising market-wide speculations of the likelihood of an impending price increase.
The hike, along with the proposed increase in the price of electricity at an average of about 15%, effective from July, would have no major implications on inflation. As per Naeem Research’s calculations, this will keep headline CPI at or around 5% and not requiring any shifts in monetary policy.
What remains to be seen, is if the fuel price indexation committee makes any changes to the price of diesel, starting from July 2021, in the next price review meeting.