People walking in Tehran Bazaar. Photo published by Fararu

People walking in Tehran Bazaar. Photo published by Fararu

Food, Housing Costs In Iran Rose Up To 700 Percent In Six Years

12/22/2021

Food and housing expenses in Iran have increased between 300 to 740 percent in the past six years, while wages went up by around 270 percent, a new report says.

The comparison between prices in December 2015 and now is revealing in one important respect. Iran was still under international sanctions six years ago after the nuclear agreement was concluded but economic restrictions were officially still in place. Prices did not change much after sanctions were lifted in early 2016 until the United States imposed new sanctions in 2018, with a devastating impact on the country’s economy.

Fararu website in Tehran has compared prices for this period, without any commentary but the comparison is interesting in the sense that rising prices are closely linked with the fall in the value of Iran’s currency.

The rial has dropped by 732 percent in six years, or rather from December 2017, when it became apparent that Donald Trump was likely to pull out of Barack Obama’s nuclear deal with Iran and impose sanctions.

One can argue that Iran had held up much better during international economic sanctions from 2011-2015, compared with how it has coped with Trump 'maximum pressure'. One reason could be that around the time when international sanctions were imposed global oil prices were hovering around $100-110 a barrel, which provided Iran with a cushion of dollar reserves. In contrast, Trump imposed sanctions on Iran’s oil exports when the average price was $70 a barrel in 2018.

The oil price of $100 in early 2010s was equivalent to 120 dollars in 2018. So, Iran was earning substantially more from its oil exports around 2010 than it did in 2018 after a big price collapse that had started in 2014.

While the US dollar rose 730 percent, housing costs climbed 740 percent on average. This has put a tremendous pressure on wage earners as in some cases rents eat up almost all of a worker's salary.

The main reason why housing costs have increased in par with the value of the dollar is that Iranian real estate owners regard their investment as a hedge against devaluation and ask prices and rents that keeps their income intact in dollars. Sale of properties can decrease, but no one is willing to sell homes and apartments at a loss calculated in dllars. Rents are a different story, as owners ask for more knowing that renters have no other choice.

Beef and chicken prices have also increased by over 300 percent, while Iranian-produced rice, which is a main food staple, has gone up by 500 percent.

The Fararu report calculates that in contrast with much higher prices, wages and salaries have increased by around 270 percent in six years, reaching a maximum of around $140 per month. There is little difference of income between a factory worker and an office employee or a young professional.

In fact, the income of workers in large industrial companies is safer than in smaller services firms which in many instances pay less to employees.

Iranian labor groups say that the minimum monthly salary needed for a family of 3.3 persons should be $400 to afford basic food and housing.

The economic hardship people face has created a potentially explosive political environment where a repeat of mass protests can take place at any moment, according to even government-controlled media in Iran.

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IITV News (24) - DC
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