Umm Hashem is a 50-year-old woman living in Ain Shams, Egypt, with her four children and three grandchildren. She has provided for her family since her husband died nine years ago. Her oldest daughter’s husband left to find work in Libya but she has not heard from him for years.
For two decades, Umm Hashem worked as a domestic cleaner in the uptown neighborhood of Heliopolis. She used to make a decent living but the COVID-19 pandemic and the subsequent devaluation of the Egyptian pound have made it much more difficult for her to make ends meet.
“I used to bring meat to my family once a week,” she says. “Now that the price of meat has doubled, I offer them meat once a month, and if things are easy, I add a chicken to share with my four children and three grandchildren.”
Umm Hashem is not alone in her struggle. According to the World Bank, one-third of Egypt’s 104 million people are poor, with another third “at risk of falling into poverty.” The devaluation of the Egyptian pound has accelerated annual inflation rates to reach about 36.8% in June up from 26% in January 2023, the highest level in five years.
The Egyptian pound has lost about half of its value against the US dollar since March 2022. This has led to a shortage of dollars in the country which in turn has reduced imports and caused the price of goods to rise.
This has had a devastating impact on household incomes across Egypt. Mohamed Al-Kilani, an economics professor and member of the Egyptian Society of Political Economy, says that the crisis is having both a short-term and long-term impact on Egyptian families.
“In the short term, people will have to make difficult choices about what they can afford to buy,” he says. “They may have to give up things they considered basic commodities, such as meat or vegetables, and turn to cheaper alternatives. In the long term, the crisis is eroding savings and making it difficult for families to meet their basic needs.”
Al-Kilani added that the long-term impact of the crisis is the erosion of savings or their complete loss, and the inability of a large segment of middle-class families to meet their families’ needs for quality education and suitable housing or to meet marriage expenses. As for poor families, their feelings of helplessness and powerlessness only deepen.
According to Al-Kilan, the economic policy of Egypt has only been dealing with the problem on the surface while allowing the root of the problem to deepen. This has led to the dramatic fall of the Egyptian pound and the depletion of cash reserves. The Russian-Ukrainian war and the COVID-19 crisis have also proved the failure of this economic policy.
To address the crisis, the government has taken certain steps, such as increasing fuel subsidies and providing cash assistance to the poor but these measures have largely been ineffective. Al-Kilan argues that the government must take a more comprehensive approach to addressing the crisis, including economic reform, a reduction in corruption, and investing in job creation.
The impact of inflation on household income in Egypt is a complicated issue with no simple solutions. The crisis, on the other hand, is having a significant negative impact on the lives of millions of Egyptians. The government must act quickly to address the crisis or the country will suffer long-term and devastating consequences.
