Iranians in a food market
Iran’s point-to-point inflation for the previous Iranian calendar month – which ended November 21 – was about 50 percent with food inflation recorded at above 70 percent in 12 provinces.
According to a recent report by EcoIran website, as the government lifted import subsidies for essential goods earlier this year, food prices have jumped an average of 67.7 percent compared with the same period in the previous year. The news outlet said that at least 12 provinces are in a red state in terms of food inflation, referring to a very critical condition.
The inflation rate for food items was especially high in the province of Sistan-Baluchestan, reaching a whopping 84 percent, with Lorestan province hitting 78 percent to be tat second place. The two provinces are low-income regions where the quality of the items they consume are also lower than in other provinces.
The figures indicated a slower rise in prices as the inflation of food items even reached 100 percent in some provinces in previous months. According to the data published by the Statistical Center of Iran (SCI) in late July, the overall nationwide point-to-point annual food inflation rate in June 2022 compared with the same period in 2021 was 87 percent, but in four provinces the rate reached almost 100 percent.
Most price increases happened since early May when the government scrapped a food import subsidy to save around $15 billion annually. The move immediately triggered a massive rise in prices for basic food staples, such as bread, dairy products, cooking oil and meat. Although the government has repeatedly said its oil exports are steadily increasing despite sanctions by the United States, economic conditions keep deteriorating, with Iran's battered currency, the rial, hitting historic lows in the recent months with sporadic recuperations.
The rate of Iran’s point-to-point food inflation in 12 provinces for the previous Persian month (ended November 21)
The rial has been in a freefall since the current wave of protests and strikes have rocked the country following the death in custody of Mahsa Amini, hitting a low of more than 360,000 rials against the US dollar in November. The US dollar rose from 295,000 rials to 365,000 in two months, but that is just an early signal of what is to come considering the ongoing protests.
Despite assurances by President Ebrahim Raisi’s government that it has stopped printing money, Mahmoud Jamsaz, an economist in Tehran, insisted that simply the format of government borrowing has changed, not the fact that it is adding to the money supply. This in turn fuels more inflation, impoverishing tens of millions of people who were modest wage earners or members of the middle class, able to live relatively comfortable lives before. It is not clear how much foreign currency the government has injected into the market since the first week of September when the rial began to fall. Often, the Central Bank of Iran (CBI) withholds such information.
There have been unconfirmed reports that people associated with the government have been sending their capital out of the country as protests show no signs of stopping. Unlike past nationwide unrest, this time it is clear that protesters want an end to the clerical regime of the Islamic Republic and will not be easily satisfied with minimal concessions, even if the hardliner core of the regime decides to offer an olive branch.
As antigovernment protests continue in Iran, the government will face a multitude of additional economic problems and energy crisis in the coming months.