Egypt raised fuel prices for the second time this year, with fuel prices up by up to 12.9% for conventional fuels, according to an Oil Ministry statement following a decision by its fuel pricing committee that came into effect Friday. A government push to phase out energy subsidies and bring domestic prices in line with international energy markets has seen 95-octane prices rise by 40.7%, 92-octane by 54.0%, 80-octane by 61.4%, and diesel prices by 75.0% since the start of 2024, according to calculations by EnterpriseAM.

The move came amid discussions on the IMF’s combined fifth and sixth reviews of our USD 8 bn Extended Fund Facility program, which took place between an Egyptian delegation and the fund on the sidelines of the World Bank and IMF annual meetup in Washington that wrapped Saturday. One of Egypt’s main commitments — and sticking points — with the fund was to close the gap between fuel cost and its end price by the close of 2025, excluding diesel.

(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 what you’re paying now:

  • 95-Octane is now priced at EGP 21.00 per liter, up 10.5% from EGP 19.00;
  • 92-Octane rose to EGP 19.25 per liter, up 11.6% from EGP 17.25;
  • 80-Octane is now EGP 17.75 per liter, a 12.7% increase from EGP 15.75;
  • Diesel price climbed to EGP 17.50 per liter, up 12.9% from EGP 15.50;
  • The price of compressed natural gas for automobiles rose to EGP 10.00 per cubic meter, up 42.9% from EGP 7.00 previously — a price that has been fixed since October 2024.

But on the plus side, this will be the last fuel price hike for at least a year, according to the ministry. The decision was supported by the decline in global oil prices, the improvement in the exchange rate, and Egypt’s success in securing its petroleum needs, which allowed the state to recover costs and fix prices for a full year instead of conducting quarterly reviews, a government source told EnterpriseAM. The source added that improving regional conditions also helped redistribute the burden across all petroleum products and reduce some of the previously planned increases before the Gaza onslaught was halted.

The hike is widely expected to break the country’s four-month streak of cooling inflation, potentially rising up to 13.5% y-o-y in October, up 1.8 percentage points from September, Al Ahly Pharos’ Hany Genena told EnterpriseAM. The increase could also result in month-on-month inflation rising from September’s 1.8% to as high as 3.5%, according to Genena.

But even with the speeding up of inflation to this point, inflation will still be short of a good 8% or more from the country’s overnight lending rate of 22.00%, Genena added. Analysts seem in agreement that the central bank will hit pause on rate cuts this November to assess the impact of the fuel price hikes, but many, including Genena, think the central bank may decide that it has the room for another 100 bps cut in December.

“We believe the fuel price hike will cast its shadow on inflation rate through mainly impacting food and transportation items,” Thndr Securities Brokerage’s Esraa Ahmed told us. “We believe annual inflation rate will remain relatively contained, hovering around 12.5-13%, giving CBE room to cut interest rates gradually by another 100 bps up to year-end.”

DATA POINT- The price increase will save the government some EGP 28 bn this fiscal year, an unnamed government official told Asharq Business.

Rising diesel prices will likely push up production and distribution costs for farmers, especially those producing fruits, vegetables, and foodstuffs, which in turn could lead to higher prices for consumers, Farmers’ Syndicate head Hussein Abu Saddam told us. However, the effect on manufactured food prices is expected to remain limited due to the stronger exchange rate and lower import costs, which have helped stabilize production inputs, Egyptian Federation of Chambers of Commerce’s Food Division member Hazem El Menoufy told EnterpriseAM. El Menoufy explained that ample supply and strong competition among producers will also help prevent large price increases.

Freight rates for container transport at ports are also expected to rise following the diesel price hike, Chamber of Commerce’s International Transport and Logistics Division Secretary General Amr Al Samdoni told EnterpriseAM. Al Samadoni said that his division is currently assessing the size of the increase.

Land freight rates have already seen limited movement, with expected increases of 7-8% following the rise in diesel prices, the Alexandria Chamber of Commerce’s International Transport and Logistics Services Division said in a statement. The expected increase represents a realistic reflection of cost pressures, while remaining balanced with current market demand, Land Transport Committee head Mansour El Bereek told us.

The increase in prices is also expected to raise operating costs for mobile networks and telecom infrastructure, a senior source at a telecom company told EnterpriseAM, adding that companies are trying to absorb the increase internally while ensuring service quality. Another industry source said that a study on operating costs will be conducted, and if expenses rise significantly, companies may request the National Telecoms Regulatory Authority to review potential adjustments to service prices.

The rise in fuel prices will likely have a limited effect on building materials, as the construction sector relies on several energy sources beyond petroleum, Chamber of Commerce’s Building Materials Division head Ahmed Al Zeini told EnterpriseAM. However, land transport and freight costs are expected to increase, Al Zeini said.

The price hike also caught the attention of the international press: Reuters | Bloomberg | Associated Press.

Tags: