Food Prices Keep Rising To Alarming Levels In Iran
Mardo Soghom
Iran International
Prices for essential food items jumped more than 60 percent in Iran in October compared with the same period last year, showing a relentless pace in inflation.
Iran International
Prices for essential food items jumped more than 60 percent in Iran in October compared with the same period last year, showing a relentless pace in inflation.
The highest price increase was related to sugar, which jumped by 76 percent compared to October 2020 as the government stopped allocating cheap dollars for its import. The data was released this week by the Ministry of Industry, Mines and Trade.
Since April 2018, Iran has been providing US dollars to importers of essential goods at the preferential rate of 42,000 rials, while the dollar has steadily climbed against Iran’s rial, reaching 290,000 in November.
This was in fact a food subsidy first provided when looming US economic sanctions in early 2018 were already creating high inflation in the country.
The cash-strapped government has been winding down the preferential dollar rate, which could push the current 50-percent inflation rate even higher. This indirect subsidy has cost the government at least $8 billion a year, roughly equal to its oil income in the same period.
Sugar is a vivid example as an essential food staple, with the price expected to rise even higher as stockpiles of subsidized imports decline and importers have to buy dollars at much higher rates.
Rice, which is a central staple of Iranian diet rose by more than 60 percent compared to last year. Imported rice had a smaller price increase, because of the indirect government subsidy, which could run out in the near future.
The reason for the steep price increase of domestic rice could be partly attributed to worsening drought this year, but production cost including fertilizer, and overall inflation also play a role.
Price of chicken meat increased by 42 percent, reaching $1.30 per kilogram. This is a good price compared with other countries, but the falling incomes of Iranians should be considered. A blue-collar worker earns around $100 a month and an office worker $150. If the worker has to feed a family of three, buying poultry becomes difficult and buying red meat at $4-5 becomes a luxury.
Reports say that meet consumption has fallen by around 40% this year as the price rose an average of 60 percent.
An even more alarming inflation news pertains to price increases in just one month, from September to October. Food prices rose between 1.9 to 8.4 percent on month-to-month basis, a sign of more trouble down the road.
Iran has experienced rounds of protests since December 2017, all triggered by high inflation. But every protest quickly turned into anti-government and anti-regime unrest. Economic hardship leads to demonstrations, but protesters have other deep grievances, such as religious restrictions on lifestyle, government corruption, nepotism and pessimism about the future that quickly manifest themselves.
During a visit to the United Arab Emirates on November 24, only a few days before leaving for Vienna for nuclear negotiations with world powers, Iran's Deputy Foreign Minister Ali Bagheri Kani pledged on behalf of the Islamic Republic to begin a new chapter in relations with the UAE, Bloomberg reported.
On the same day, Bagheri described the meeting in Dubai with UAE Presidential Adviser Anwar Gargash as “friendly and cordial.”
Three days before Bagheri's visit, Iran and UAE foreign ministers had welcomed the improvement of ties during a telephone conversation. Meanwhile, the Iranian Foreign Minister Hossein Amir-Abdollahian said that Tehran attaches special importance to its ties with the UAE, particularly in the area of trade.
Iran has been using Dubai as a key outlet to international markets often referring to it as a one-stop-shop that could provide goods to Iran from a variety of Asian and other countries. Many Iranian merchants maintain offices in Dubai where they have residence and business permits. Many other Iranians own real estate in Dubai and foreign-based satellite televisions constantly advertise properties in the UAE Iranians can buy with little or no legal restrictions.
Reports coming from the UAE by the end of November indicated that the United Arab Emirates would soon send a delegation to Iran as part of efforts to improve ties with rival Tehran. Gargash told reporters that the UAE will keep its Arab neighbors and allies including the Saudis "in the picture" about the developments in bilateral ties with Iran.
Some observers believe that attempts toward a rapprochement with Iran are motivated by the general perception in the region, following US withdrawal from Afghanistan, that Washington has shifted its attention from the Middle East to East Asia, and players in the region may no longer be counting on the US to protect them against Iran's ambitions.
Noor News, a website close to the Iranian Supreme Council of National Security, has opined, that Iranian officials would welcome the upcoming visit by a high-ranking UAE delegation, which could be a positive step to reduce tensions. Meanwhile, the website said it is significant that the UAE has started this move while Iran is holding talks in Vienna. The gesture by the UAE would mean that Iran is not an isolated state.
Furthermore, UAE businesses may be showing their willingness to win the lion's share of Iran's foreign trade once US sanctions on Iran's international commerce and banking are lifted if the talks in Vienna prove successful.
Monday November 29 was the 50th anniversary of Iran capturing the three islands of Abu Musa, and the Lesser and Greater Tunb Islands in the Persian Gulf. While many Iranian media reports and social media accounts were cheerful about the anniversary, Turkey's national TV, TRT, on its Arabic Twitter account described the Islands as UAE islands occupied by Iran. This has annoyed Iranians as the dispute over the ownership of the three islands once again found its way into media. Iran at various points provided documents that indicate the islands were rented out to Arabs during the British colonial period.
Although the UAE has made no new claim about the islands, some Iranian media outlets and social media accounts have been talking about a Turkish conspiracy to damage the rapprochement that has been taking shape over the past weeks between Tehran and Abu Dhabi.