The Economic Effects of the Corona Virus on Food Spending in Egypt

The research aims to identify changes in consumer spending patterns on the main spending groups for food and drink in urban and rural Egypt due to the impact of covid 19. The study relies on recent data from CAPMAS’s survey of income, expenditure and consumption for 2017/2018 and 2019/2020. 
In order to forecast the new expenditure patterns, we employed Working’s model in the study because it is consistent with economic theory in general and with Engel aggregation condition in particular. That is if we increase our expenditure on one good the expenditure on other goods will be affected in such a way to satisfy the budget constraint. Working’s model fits cross-sectional data quite well and it provides the basis for the well-known almost ideal demand system. The study breaks down the family total expenditure into six food groups and four non-food groups. The estimates for all commodity groups in urban areas are robust and statistically significant. Similarly, the estimates for the rural families are in agreement with prior expectations and highly significant for all commodity groups.
Accordingly, the research comparing the patterns of consumer spending in both rural and urban areas during the year 2017/2018, it is clear that the poor family spends about 91.2% of its annual income on food and drink in the countryside, and about 66.7% in the urban areas. It was also found that spending flexibility has increased in value in rural and urban areas after the spread of the Corona virus than it was before, but it remained less than one, which means that it is a necessary commodity, while for a group of other non-food commodities, the spending flexibility was greater than one, which means that it is luxury.
The study recommends that the government should take the necessary measures to treat the negative effects of the spread of this epidemic and its negative effects on the Egyptian economy, such as cash support for poor families in proportion to the decrease in real family income, and that this support is increased annually to match the expected increase in the cost of living. The study also recommends that future research work to exploit the Working model in studying the expected effects of a decrease in real income on the demand for individual commodities, not just commodity groups, as permitted by the available data. And work to increase the production of the various food groups to meet the expected increase in the consumption of these commodity groups in both rural and urban areas.