Targeted electricity price hikes for high-end consumers and businesses could push Egypt’s inflation toward 17% by May, as producers pass on costs from a double shock of utility and fuel increases. While the government has frozen rates for most households, the move risks reigniting a fresh inflationary cycle as production costs for appliances and fertilizers filter through to the wider market.
The decision follows a 3 Egyptian pound per liter increase in fuel prices approved by the Ministry of Petroleum last month, which coincided with global energy spikes triggered by the US-Israeli war on Iran. Officials from the Ministry of Electricity and Renewable Energy characterized the subsequent power hikes as “unavoidable” to ensure supply continuity amid the regional energy shortage.
Effective this month, the ministry has frozen residential rates for all consumption up to 2,000 kilowatt-hours (kWh) per month to shield the majority of Egyptian households. However, top-tier residential users exceeding that threshold face an average hike of 16%. For these high-end households, where the baseline cost to enter the top bracket starts at 4,460 pounds (nearly $82.60), the increase adds to a mounting cost-of-living crisis. Meanwhile, the Ministry has applied a blanket increase to the commercial sector, where businesses face an average surge of roughly 20%.
Escalating pressure on industry
Hassan Mabrouk, head of the household appliances and electrical division at the Federation of Industries, said the electricity hike adds a new burden to production costs following the recent fuel price hikes and successive increases in other inputs.
Fees on imported sheet metal, exchange rate fluctuations, and rising labor costs are already pushing household appliance prices up by as much as 20%, Mabrouk told Al Manassa.
According to a report by Al Arabiya Business, household appliance companies have raised their prices by 15–20% since the start of the US-Israeli war on Iran in late February. Further increases are expected if supply chain pressures continue to mount.
Building materials: Relatively limited impact
In contrast, Ahmed El-Zaini, head of the building materials division at the Federation of Egyptian Chambers of Commerce, told Al Manassa the sector remains largely insulated from the hike. He noted that electricity accounts for less than 5% of production costs and will likely impact final prices by no more than 1%
El-Zaini pointed out that stagnant sales, resulting from difficulties in building permits and weak liquidity, might push companies to absorb minor increases rather than passing them on to consumers. Most iron and cement companies price their products according to a dollar exchange rate higher than the official one, providing them a margin to face cost fluctuations. Currently, a ton of Ezz Steel costs about 38,700 pounds (nearly $720), while gray cement averages around 4,100 pounds (about $76).
Fertilizers under pressure
In the fertilizer sector, Mohamed Elkheshen, head of the Fertilizer Distributors Association and chairman of Evergrow, noted that electricity is a key production cost, with the hike expected to raise final prices by about 10%.
The local market is simultaneously facing a spike in global urea prices, which jumped to about $800—double the cost recorded before the outbreak of the war in Iran, Elkheshen said.
He noted that fertilizer prices recently saw limited increases ranging between 2,000 and 3,000 Egyptian pounds (roughly $37 to $56) per ton, reaching about 23,000 Egyptian pounds (nearly $425). He expects further increases of up to 30% in the coming period if global and local energy prices continue to rise.
Inflation facing an inevitable rise
On the macroeconomic level, analysts expect the combined energy price hikes to seep gradually into consumer prices through production chains. Mina Rafik, senior analyst at Prime Investment, told Al Manassa that the re-pricing of production inputs will likely reflect in inflation readings during April and May within a range of 15–17%.
Aya Zoheir, head of research at Zilla Capital, agreed, noting that while March inflation, which she predicted to reach 16–16.5%, is driven by the fuel price increase, the full electricity effect will likely push the rate toward 17% in the coming months.
