CAIRO - 20 July 2022: A state of anger and resentment spread among citizens on social media after the increase of the price of McDonald's meals which were hiked by about LE 40 or 50 percent per meal.
This rise in prices was not the first during the current period as the company raised the prices during the last period in the consequences of the Russian-Ukrainian war and the rise in the dollar exchange rate in Egypt.
The price of the share box meal increased from LE 123 to LE 165. The Grand Share Box rose from LE 176 to LE 235. As for a medium Big Mac meal hiked from LE 52 to LE 78.
The price of a Big Mac meal climbed from LE 59, to LE 88. The price of a medium Big Tasty meal was LE 92, and became LE 123.
Regarding the Big Tasty meal, it increased from LE 99 to LE 133. The price of a large Double Big Tasty meal was LE 127, and became LE 149.
The rise of the meals’ prices came after the hike in fuel prices in Egypt by a range from 50 piasters to LE 1 per liter in the local markets, as per a decision issued by the Fuel Automatic Pricing Committee.
The new prices are LE 8 for 80 octane gasoline up from LE 7.25; LE 9.25 for 92 octane gasoline up from LE 8.75; and LE 10.75 for 95 octane gasoline, up from LE 9.75. As for diesel fuel, its price went up for the first time in 3 years. The committee increased it by 50 piasters to go up to LE 7.25 from LE 6.75.
Meanwhile, the price of a ton of diesel for industries rose by LE 400, bringing it to reach LE 5,000/ton. However, the prices of diesel supplied to the food and electricity industries remained unchanged.
Poultry Division Comment
After the increase in the prices of McDonald's meals and sandwiches, Abdul Aziz Al-Sayed, head of the Pourltry Division, commented to one of the local outlets, that the prices of chicken during the current time are completely stable and the reasons for the rise in McDonald's meals are not clear, pointing out that there was no monitoring by the relevant division.
He pointed out that the price of a kilo of chicken at the present time ranges between LE 35 to LE 37, and in the farmhouse ranges from LE LE 31 to LE 32, and it may have come as a result of the high cost of production, distribution and employment in the various McDonald's branches.
Egypt’s imports of goods jumped by 90 percent per month, since the start of the Russian-Ukrainian war, and the subsequent sharp rise in the prices of basic commodities, according to Minister of Finance Mohamed Maait.
Maait noted that the monthly imports amounted to $9.5 billion, up from $5 billion before the war, attributing the high bill to the rise in the prices of basic commodities led by energy and food, in addition to the high cost of shipping and importing from international markets.
Because of the Russian-Ukrainian war, Egypt is facing growing financial and economic challenges, which prompted it to request a financial loan from the International Monetary Fund.
He pointed out that after the spread of the Coronavirus pandemic, the Ukraine crisis occurred, which led to a rise in the price of a barrel of oil, which reached $120 dollars per barrel, and Egypt imports 120 million barrels at $7.2 billion; an additional burden of $2 billion.
"We import 12 million tons of wheat, 6 million of which are from the private sector and 6 million from abroad, thus becoming Egypt's number one importer of wheat around the world,” he added.
Feedback among people
Ayman Awaad commented on the new prices on his social media Facebook account saying that no sane person would pay LE700 for two burger sandwiches, asking citizens to boycott the company and let its sandwiches rot.
Awaad described the prices hike as underestminaring from Mcdonald’s to the citizens.
The concept of fast food is to have a fast and cheap meal with a moderate price, Jehad Araby explained, stating that the price of a Mcdonald’s sandwich equals the price of a half grilled chicken, wondering of the unfair comparison between both meals which goes for the grilled chicken favor.
On the same hand, Farid questioned the quality of the food by saying,” I wish it’s edible.”
How can the price of Mcdonald’s sandwiches reflect an economic position?
In 1986, The Economist took advantage of the fact that the ingredients of the Big Mac sandwich are the same in any country where Mcdonald’s fast-food chain existed. Considering that McDonald's stores are spread in 120 countries and the components of the mac meal are fixed, and therefore they can quickly judge the purchasing power of currencies by comparing the prices of the meal in different countries of the world.
It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalize the prices of an identical basket of goods and services (in this case, a burger) in any two countries, according to the Economist. It reveals “whether currencies are at their “correct” level”
In January 2022, the Egyptian pound was undervalued by 53.4 percent against the dollar, according to the index.
How does the index work?
The comparison takes place on two levels:
A comparison between the price of a meal in Egypt and its price in the country of origin in the United States.
A comparison of the cost of a meal relative to the minimum wage in the United States and Egypt.
Comparison between the price of a meal in America and Egypt:
In the US the price of a meal varies with a highest of $5.99, while in Egypt, the price of the meal according to the new price is LE 88 ($4.65). With an exchange rate of LE 18.9 per dollar, the price of a meal in America would be LE 113.211.
Therefore, the price of a meal in the United States is more expensive than its price in Egypt by 128 percent which means that Egypt is cheaper than America for the American person or those who get paid in dollars.
Comparison of the cost of a meal relative to the minimum wage in the United States and in Egypt:
The Minimum wage in the United States is $7.25 per hour. With 30-34 working hours per week, the minimum salary ranges between $986 to $1160 with an average of $1073.
The cost of buying a Big Mac meal compared to the salary in America represents 0.56 percent of the salary. The minimum salary of $986 can afford 164.6 Mcdonald’s meals.
As for Egypt, the LE2,700 minimum wage can afford 30.7 meals. The cost of buying a Big Mac meal compared to the salary in Egypt represents 3.27 percent of the salary.