Fuel Subsidy Cuts Leave Egyptians Bracing for Another Cost-of-Living Shock

Egyptians are bracing for another round of fuel-price increases as the government resumes its plan to reduce subsidies. At a press conference in the New Administrative Capital on March 12, Prime Minister Mostafa Madbouly reaffirmed the objective of completing the adjustment by the end of 2025.

The plan does not mean that every energy product will lose all support. Madbouly said cross-subsidies between products would remain and domestic cooking-gas cylinders would continue to be subsidised. The next fuel-pricing review was expected after the six-month interval announced in October 2024.

The changes form part of Egypt’s commitments under its International Monetary Fund programme. On March 10, the IMF’s Executive Board completed the fourth review of the Extended Fund Facility, making approximately $1.2 billion available. It also approved a separate Resilience and Sustainability Facility arrangement of around $1.3 billion, to be disbursed in stages. The decisions were announced on March 11.

Fuel prices rose repeatedly from 2014 onward, but the trajectory was not an uninterrupted series of increases. Petrol prices were cut in October 2019 and April 2020. The following charts distinguish selected price adjustments from annual averages and use pounds per litre unless otherwise indicated.

Petrol prices increased three times in 2021, in April, July and October.

Three further adjustments followed in 2022. The first took effect in February, although it applied to the year’s first quarter. Diesel prices remained unchanged until the July increase.

In 2023, petrol rose in March and November. The May decision increased diesel by one pound per litre while leaving petrol prices unchanged. The March price of 92-octane petrol was EGP 10.25, correcting the duplicated 80-octane value in the original graphic.

Politician and economic researcher Zohdy El-Shamy attributes the repeated increases to what he sees as the government’s continuing dependence on the IMF. Speaking to Zawia3, he argues that officials present the situation as normal when, in his assessment, it reflects damaging economic policies and their failure to protect living standards.

He criticises the numerous fuel-price increases in recent years, including three in 2024, and says the government gives too little weight to their consequences for households. He believes continued currency depreciation and subsidy reductions produce successive waves of higher prices and intensify social pressure.

El-Shamy warns that repeated currency and subsidy adjustments deepen an already severe cost-of-living crisis, while households struggle to absorb each new increase.

Prices cited at different points in 2024 should not be confused with those in force at the year’s end. Diesel reached EGP 10 per litre and a domestic cooking-gas cylinder EGP 100 earlier in the year. By October 18, 2024, diesel was EGP 13.50 per litre, while natural gas for vehicles was EGP 7 per cubic metre. The latter uses a different unit from liquid fuels.

Historical price checks: IISD’s August 2014 subsidy update; the July 2020 pricing decision; the Petroleum Ministry’s October 2022 statement; and the November 2023 decision.

Energy prices and low-income households

The IMF said in 2024 that Egypt could move away from a strictly quarterly schedule of increases while maintaining its commitment to bring fuel products to cost-recovery levels by the end of 2025. The Fund reiterated that deadline in its March 13 briefing.

Cabinet spokesperson Mohamed El-Homsany said the state was continuing its economic reform programme and that making subsidies more efficient and directing them toward intended recipients were government priorities.

He described a gradual, balanced adjustment, with some petroleum products remaining supported through the pricing of others. He said keeping diesel prices at a manageable level mattered because of their direct effect on transport, services and commodity prices. He also said support for diesel and cooking gas would continue beyond the end of the fiscal year because of their importance to low-income households.

Mona Ezzat, a researcher on economic and social rights, argues that a gradual timetable alone cannot shield consumers. Without effective measures to regulate markets and prices, she tells Zawia3, reducing energy subsidies will feed through into widespread increases and weaken purchasing power.

Promises to limit diesel increases will not be sufficient, she says, if the government does not address how higher costs are passed on. She expects poor and middle-income households to carry a heavy burden.

For Ezzat, the question is who absorbs the cost: wage increases and social assistance can quickly lose their value when transport, food and other necessities rise together.

She points out that the proposed changes would unfold over only a few months, overlapping with holidays and the start of a new school year. These are already periods of intense financial pressure for many families. She fears some middle-income households will move into lower income brackets, while poverty deepens among those already struggling.

Recent wage increases, the government’s social protection package and assistance for informal workers may all be eroded by the resulting price rises, Ezzat says. In her view, the scale of subsidy withdrawal risks generating a sustained wave of inflation with serious social and economic consequences.

People on low incomes and those working informally are particularly exposed. Many small businesses have yet to recover from the pandemic and successive price shocks, she says, and another increase in operating costs could threaten their survival and their owners’ livelihoods.

Street vendors, for example, buy stock from retailers and depend on narrow margins. Rising purchase prices can squeeze those margins further, forcing some to leave an activity and seek another way to support their families.

The lower middle class already relies heavily on borrowing, instalments and rotating savings groups, known as gam‘eyat, to meet essential expenses such as school fees. Ezzat expects further price increases to make those commitments harder to manage.

She also fears that recipients of Takaful and Karama cash assistance may have to divert money they would otherwise spend on their children’s education toward food and immediate household needs. The programme is broader than an education grant, but her concern is that households under pressure will struggle to meet both everyday and educational costs.

Ezzat concludes that the government has not adequately accounted for the combined economic and social effects. Announced wage increases in the coming budget, she argues, cannot by themselves offset a rapid withdrawal of subsidies if inflation absorbs the gains.

Higher prices, uneven wage protection

Mohamed Ramadan, an economic researcher at the Egyptian Initiative for Personal Rights, expects higher fuel and energy prices to raise inflation directly and through the cost of producing and transporting goods.

He tells Zawia3 that the inflationary effects of currency depreciation had begun to ease, but their duration remained uncertain and tied to pressures on dollar liquidity in the Egyptian market.

For Ramadan, comparing the minimum wage with expected price increases leaves a more basic question unanswered: which workers actually receive the minimum? He says temporary workers in state-owned factories and companies can fall outside effective protection, while informal employment leaves many private-sector workers without enforceable contracts or social insurance.

He estimates that seven in ten workers lack formal contracts, but the original reporting does not identify the statistical series or workforce definition behind that estimate. His wider argument concerns the gap between an announced legal floor and workers’ actual pay.

The timetable also matters. The private-sector minimum increased to EGP 7,000 from March 1, 2025. The increase to EGP 7,000 for government employees was announced for July 2025, so it was not yet in force for that group when this report was published.

Ramadan argues that formal wage increases benefit established government employees more readily than those in insecure work, and that the government lacks effective mechanisms to ensure compliance across the labour market.

He uses a dollar comparison to illustrate the effect of depreciation: a monthly wage of EGP 2,000 at an exchange rate of EGP 16 to the dollar equalled $125. EGP 7,000 at EGP 50 to the dollar equals $140; at a rate above 50, it is slightly less. The comparison is illustrative and does not, by itself, measure domestic purchasing power.

Ramadan’s central argument is that the nominal increase is much less impressive once currency depreciation and accumulated price rises are considered. He expects purchasing power to remain under pressure.

According to the Central Bank’s release for February 2025, monthly urban consumer-price inflation was 1.4%, compared with 11.4% in February 2024 and 1.5% in January 2025. Annual urban inflation fell to 12.8% from 24% in January. A lower inflation rate means prices are rising more slowly; it does not reverse the accumulated increase in households’ living costs.