Economists call for govt price controls to offset inflation

Local economy experts are proposing that the government adopt mechanisms aimed at controlling skyrocketing retail prices, including mandatory pricing schemes and profit ceilings.

Economy professor Hamdi Abdel Azim maintains that price controls do not contradict free-market policies.

“The government already has a set pricing policy for pharmaceutical and petroleum products,” he said. “This should be extended to cover other products as well in order to protect consumers.”

“The government should also establish a maximum profit margin of 30 percent so that consumer prices become more affordable,” Abdel Azim added. He said that the government’s Pricing Authority should be reactivated after having been abolished in 1976 with late president Anwar Sadat’s “open-door” policy.

Economy professor Ibrahim al-Esawy agreed.

“Reactivating the Pricing Authority would not mean a return to socialism,” he said. “Even capitalist governments interfere with prices in times of crisis,” he noted, pointing to recent US government moves to reset retail steel prices.

“Controlling prices requires increased production, especially of strategic commodities such as wheat,” al-Esawy added. “Increased production raises supply over demand and consequently brings down prices.”

“Halting imports or levying dumping fees might reduce prices temporarily, but they’re bound to go up again if national production is not increased in tandem,” he explained.

Economy expert Samir Radwan, for his part, disagreed with this view.

“When the state controlled prices in the 1950s and 1960s, it failed to modernize industry to cope with new technological advances on the world stage,” he said. “So it had to return to the free-market economy, which has more advantages than disadvantages.”

“But even the free-market economy needs supervision,” Radwan added, pointing to the recent real-state crisis in the US, which led to the collapse of the entire US economy. “The state must agree with chambers of commerce and trade on a fair profit margin adhered to by everyone.”

“Consumers, meanwhile, must refrain from pursuing lifestyles of so-called ‘conspicuous consumption,’ which also serves to bring prices up,” he went on to note. “Some 60 percent of Egyptian food purchases, for example, end up in the garbage can.”

Translated from the Arabic Edition.

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