Your fuel bill went up again: The Madbouly government raised fuel prices over the long weekend, according to decisions published in the Official Gazette. Fuel prices increased by 10-15% as of last Thursday.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Here's a breakdown of the new prices:

  • 95-Octane is EGP 15 per liter, up 11% from EGP 13.50;
  • 92-Octane is EGP 13.75 per liter, up 10% from EGP 12.50;
  • 80-Octane is EGP 12.25 per liter, up 11% from EGP 11.0;
  • Diesel prices rose by 15% to EGP 11.50 per liter from EGP 10.0;
  • The price of kerosene oil also rose by 15% to EGP 11.50 per liter.

Industrial mazut prices also got a bump: The price of mazut for most industries increased to EGP 8.5k per ton, up 13.3% from EGP 7.5k previously. The government has kept mazut prices stable for electricity generation and food industries, according to the Official Gazette.

This marks the second fuel price hike in 2024: The move comes just four months after the last price hike in March, which saw petrol prices rise 8-10% and diesel prices jump by 21.2%.

We saw it coming: We’ve been anticipating fuel and electricity price hikes for months now, especially after Prime Minister Moustafa Madbouly signaled that the state was looking to “restore balance” between cost of production and end price by the close of 2025.

The rationale: The EGP float in March, rising global Brent crude prices due to the ongoing war in Ukraine, and regional tension that have driven up shipping fees and ins. costs have all contributed to inflated costs across all petroleum products, whether exported or locally produced, Oil Ministry spokesperson Hamdi Abdel Aziz told MP and TV presenter Mostafa Bakry (watch, runtime: 6:40). “For example, the cost of producing diesel is around EGP 19 a liter and prior to the hikes, it was sold at EGP 10," Abdel Aziz said, adding that the state has been spending some EGP 400 mn a day on diesel subsidies and about EGP 90 mn on octane subsidies.

Fuel hikes have also been a key talking point with the IMF, which is thought to have pushed back its executive board’s discussions of the third review of our USD 8 bn loan program to tomorrow from early July to see how the newly sworn-in government will approach trimming fuel subsidies.

DATA POINT- This latest increase of fuel prices should save the state some EGP 36 bn (c. USD 745 mn) during the current fiscal year, unnamed government officials told Asharq Business.

The hike could trigger an inflationary wave: Economists and analysts anticipate that fuel price hikes will contribute to inflationary pressures in the coming months, with Capital Economics saying earlier this month that “increases to electricity and fuel prices [will present] upside risks in the coming months.” Ramona Moubarak, Fitch Solutions' director of MENA country risk, echoed the sentiment, saying that slashing fuel subsidies is bound to “keep inflation sticky in the coming months.”

Maybe not: “The hike was expected and taken into account when making our inflation forecasts for the short term,” EFG Hermes’ Mohamed Abu Basha told us, adding that he sees inflation falling to 23-24% by December and 15% by February.

Remember: Annual headline inflation cooled for the fourth consecutive month in June, hitting a 17-month low of 27.5% in urban areas, down from 28.1% in May. This came despite fears of renewed inflationary pressures following a historic increase in subsidized bread prices.

The news got attention from: Reuters and Bloomberg.

Tags: