Hike in Bread Prices In Iranian Province Triggers Nationwide Concerns
Without prior announcement, the price of bread in Iran’s northeastern Razavi Khorasan province has increased by 40 percent.
Without prior announcement, the price of bread in Iran’s northeastern Razavi Khorasan province has increased by 40 percent.
The governors of the province took the decision to increase the prices suddenly leaving locals struggling to make ends meet for their basic provisions. For example, a subsidized traditional bread called Barbari weighing nearly 400 grams, which was previously sold at 8,500 rials or 1.7 USD cents is now priced at 12,000 rials or 2.4 USD cents per piece.
Ahmad Reza Keshtgar, President of the Bakers' Union in the provincial capital of Mashhad, expressed concerns about the hike, stating that production costs are now too high for the industry to profit.
"While the 40% increase in prices has reduced production costs, bread production is still not profitable,” he said.
He added that even providing bakers with free flour would not render bread production profitable under current circumstances. As sales decline due to higher prices, the industry faces reduced revenue, potentially leading to job losses in bakeries.
The bread industry has been grappling with challenges since last year when the government withdrew subsidies for imported wheat, flour, and other essential items. The higher cost of flour is affecting a wide range of baked goods, including children's snacks, fast food like hamburgers and sandwiches, and traditional noodles.
Keshtgar revealed that the decision to raise bread prices is set to be gradually applied nationwide. There is further concern that this potentially spark another round of anti-regime protests across the country.
Abdolreza Farajirad told Entekhab news website in Tehran that the United States and Iran are exchanging messages through Oman and Qatar and this shows they are discussing deals.
Farajirad referred to US Secretary of State Antony Blinken's July 23 statements about Iran where he said, "it was a terrible mistake for the Trump administration to pull out of the nuclear deal reached with Iran in 2015," and commented that "I did not see any threats in that statement, although Blinken had also made it clear that "US officials are currently not talking about an agreement with their counterparts in Tehran."
The former Iranian diplomat argued that "What he said means that the US side is prepared for negotiations with Iran on the condition that Tehran does not threaten US interests and security in the Middle east."
He continued: "Blinken's remarks were positive. If Qatar and Oman also carry positive messages, this will mean that perhaps we are getting closer to a solution."
Entekhab wrote that other observers believe there might be a threat hidden in Blinken's statement. In effect, if US concerns about Iranian intentions to build nuclear weapons are not addressed, Washington might toughen its position.
Faraji Rad however argued that it was a positive point that Blinken was not focused on the nuclear issue in his remarks, although the United States naturally pursues its national interests.
Meanwhile, in reviewing signals Tehran and Washington have been sending to each other, proreform website Farau wrote: "Governments in Iran, regardless of their political affiliation, find out about the perils of sanctions after holding the presidential office for a few years. That is when rationality becomes prevalent."
The website was referring to hardliners currently controlling all branches of Iran’s government, who were staunchly opposed to the 2015 JCPOA nuclear accord, but now, facing harsh economic realities, realize that they have to find a way to have US sanctions lifted.
According to Fararu, the announcement by the State Department about transferring part of Iran's frozen assets in Iraq to Oman and renewed talks about US prisoners in Iran are positive developments, although some observers assess the removal of pro-Iran Robert Malley from the post of US special envoy for Iran could be a negative development for Tehran.
Fararu quoted former diplomat Fereydoun Majlesi who disagreed saying that regardless of recent developments, "there is no positive change under way!" Majlesi continued: "No positive change is likely for at least seven to 10 years. What is going on currently, will only increase the pressures on both sides.
Majlesi added that no positive change of attitude has been observed in Tehran or Washington during the past months to improve relations between the two sides although there have been opportunities for rapprochement."
Another observer, Omid Dabiri-Mehr also told Fararu that the Joint Comprehensive Plan of Action (JCPOA) is no longer on the agendas of the United States and Iran. There is no prospect for a rapprochement although a tendency is visible in Tehran to reduce the tensions with the United States.
He explained that economic problems including budget deficit and inflation and the destructive role of sanctions have finally made Iran aware of the cost of being at loggerheads with the United States.
Currently the official annual inflation rate is 47.5 percent – the highest rate in Iran for more than 30 years -- but prices for foodstuff are most affected, with the price of cooking oil rising by more than three times annual inflation at 145 percent, and the price of meat also rising by 78 percent over a one year period (point-to-point).
Economist Peyman Molavi told Iranian news website Rouydad24 on Tuesday that if the current status quo persists, the country will face an exponential rise in inflation rates and millions will be affected.
“If the economic growth rate in Iran approaches zero and the money supply (also known as market liquidity) increases more than 36%, the inflation rate will be between 55 to 60 percent,” he said.
He also warned that “if the money supply grows by more than 40 percent per month, and the economic growth is around one to two percent, we may witness an inflation rate of 70 percent.” However, the World Bank estimated Iran’s annual growth rate at 2.7 percent in 2022, mostly based on information it receives from official Iranian sources..
Such a high rate will have crippling effects on regular citizens. According to a report published by ILNA website in Tehran in January, one-third of the country’s population is now living in extreme poverty, with the number almost doubling from 2020 to 2021. However, it is believed that the real number could be far higher. According to official figures released by Interior Ministry, around 60 percent of Iranians live under the relative poverty line.
"If we fail to address and tackle this situation seriously as part of the Seventh Development Plan, we will soon face a grave crisis in the social well-being of our society," Iranian lawmaker Mohsen Pirhadi said on Monday.
Since the 1940s, Iran has launched 12 plans to build infrastructure, establish key industries, expand public services and education. Five plans were launched under the monarchy until 1979, and seven during the Islamic Republic. Nevertheless, Iran is still considered a developing country, because it economic growth rate has averaged only 2.5 percent during the Islamic Republic.
Pirhadi added that the number of people living below the poverty line in the country has reached nearly 28 million.
The "poverty line" is a level of income that covers the minimum essential needs of a household, and incomes below the line are referred to as "absolute poverty”. According to Mohammad Bagheri Banai, a lawmaker and member of the parliament’s economic committee, the poverty line for residents of Tehran, is approximately 300,000,000 rials (approx $600) per month, which is three times as much as the minimum wage in Iran.
A leading economist said in May that at least half of Iran lives below the poverty line as the government fails to solve the economic crisis, and a report by the parliament’s research center released in July said the population below the absolute poverty line increased by 30.4% in 2021.
Pirhadi, the deputy head of the parliamentary committee for Iran’s Seventh National Development Plan, stated that the economic decline in the past decade has led to social decline and a rise in financial corruption, drug abuse, and increased migration to large cities.
Over the past decades, there have been several factors hindering Iran's economic development. The revolutionary chaos of the early 1980s, and the Iran-Iraq war that caused hundreds of thousands of casualties, derailed Iran from its modernization trajectory. The Islamic government, built on an anti-Western ideology that engaged in hostage taking and supporting militant groups left the country isolated. And in addition, the inefficiency of successive clerical governments and many years of international sanctions crippled the country's economy.
The remarks by Pirhadi came a few days before the latest report by Iran's Statistics Center -- whose director was sacked by the president earlier in July. Although Iran's Statistics Center is administered and funded by the government and operates under the umbrella of the Planning and Budget Organization, it maintained a veneer of credibility as one of the very scarce sources of both economic and social data.
The Islamic Republic's authorities are trying to use new definitions and indices for the inflation so that the official figures do not increase to numbers that can create panic in the market. The country’s economy has proven especially vulnerable to sociopolitical developments, such as rumors about a possible revival of the nuclear deal or large labor strikes.
Reuters quoted an Iranian diplomat as saying that the Revolutionary Guard’s (IRGC) Quds Force attended the three-hour meeting, as Israel’s foes see an opportunity in Israel’s political turmoil related to Prime Minister Benjamin Netanyahu’s judicial reforms.
Iran and its proxy groups have been devoting special attention to the crisis at closed-door meetings, perceiving this as a potential turning point for Israel, Reuters said.
The Islamic government in Iran began encouraging Palestinian groups for intensified attacks on Israel in March, after it reached a deal with Saudi Arabia to revive diplomatic relations that month. That resulted in the April military clashes that saw hundreds of rockets fired at Israel and retaliatory strikes on Gaza.
But in their meeting last week Iran and its proxies concluded that the crisis had already weakened Israel and agreed they should refrain from any "direct interference", believing this could give Prime Minister Benjamin Netanyahu the chance to shift blame to foreign adversaries.
A Hamas source declined to comment to Reuters on the account, saying there are ongoing discussions between Hamas, Iran and the Quds Force "over the whole situation and to discuss ways to upgrade the work of resistance".
Hezbollah On Patrol
The upheaval marks one of the most serious domestic crises since Israel was established in 1948, ushering in decades of conflict with Arab countries and Palestinians.
Israel's parliament Monday ratified a first bill of the judicial overhaul, limiting the powers of the country's Supreme Court, prompting more protests by Israelis who see the moves as a menace to their democracy.
The divisions have seeped into the Israeli military, which has fought numerous conflicts with Lebanon's Hezbollah and the Palestinian factions Hamas and Islamic Jihad, that receive arms and money from Iran.
Israeli protest leaders have said thousands of volunteer reservists could abstain from duty if the government stays the course, and former senior military officials have warned that Israel's war-readiness could be at risk.
A video shared on social media on Tuesday showed elite fighters from Hezbollah mounting a rare patrol directly at the fenced Lebanese border with Israel, according to a Lebanese source familiar with the deployment.
The source said the patrol along the rugged frontier, where tensions have been running high of late, had nothing to do with events in Israel.
The source said however that Hezbollah officials have discussed the crisis in detail at the highest levels. The group views the crisis as a development to be exploited in the future, the source added.
Israeli Finance Minister Bezalel Smotrich said on Tuesday the Israeli military "is combat-ready and will remain combat-ready" despite the protesting reservists, whom he accused of trying to "put a gun to the head of the government".
Hezbollah leader Sayyed Hassan Nasrallah, in a speech on Monday, said Israel was on a "path of collapse and fragmentation".
Iranian Foreign ministry spokesperson Nasser Kanaani referred to Netanyahu's recently fitted pacemaker when tweeting about the crisis, saying "the heart of the Zionist regime is in deeper crisis than the crisis in the heart of its prime minister".
The threat of renewed large-scale clashes with Palestinians is ever present, with smaller violent incidents occurring regularly.
Sources close to Hamas and the Islamic Jihad say the two groups are monitoring closely the protests in Israel, enjoying the images, and hoping the tensions worsen.
But they are also wary of the risk of Netanyahu seeking to divert attention from the domestic crisis through conflict against Israel's enemies that could unite its people.
“They are following it seriously to assess how this could reflect on them and whether Israel could export its internal crisis,” Gaza political analyst Adnan Abu Amer said.
(Based on a report by Reuters)