Iran’s Inflation Hits 44%, Surpassing Monthly Averages
With Iran's inflation rate soaring, a new report suggests that the price hikes in most provinces are higher than the average figure announced by the authorities.
With Iran's inflation rate soaring, a new report suggests that the price hikes in most provinces are higher than the average figure announced by the authorities.
Fararu website in Tehran reported on Friday that the point-to-point inflation rate in December once again surpassed the 40% mark after five months. The index indicates that Iranian households spent approximately 40% more in the past month compared to the corresponding period of the previous year to meet their needs or purchase a range of goods and services.
According to the Iran Statistical Center's definition, point-to-point inflation rate represents the percentage change in the average of the price indices in comparison to the year before, providing a more tangible perspective on understanding price hikes. The reported point-to-point rate for the past month was 44.4% while the government had predicted an annual rate of 25 percent for the current Iranian year (started March 21).
There are no independent figures on the economy and no non-governmental entities to verify figures published by the authorities. Some politicians and media say that the real rate of inflation is higher that what the government announces.
The highest inflation rate this month was reported in hotel and restaurant services at 56.5 percent, exceeding about 16 percent over the average annual rate of about 40 percent promulgated by the authorities. Inflation for clothing and shoes was at 47.2%, cigarettes at 45.8%, recreation and culture at 44.1%, education at 42% and foods at 41.3%.
Notably, the prices of red and white meat have surged by about 95% in the last 12 months, also surpassing the overall inflation rate. Lawmaker Asghar Salimi cautioned earlier this month that meat is now excluded from the typical Iranian household's food basket, emphasizing the potential consequences for the next generation.
Iranian authorities use different rates for different political agendas. For example, when they aim to defend low salary increases for government sector workers, they use lower inflation figures, but when they want to justify the 34% rise in tariffs – announced Friday – they say the increase is less than the 40% general inflation.
Additionally, the government also focuses on the average for the entire country to decrease the figures, making the best uses of the poor provinces where goods and services are cheaper. According to the latest data, the point-to-point inflation rate for the Yazd province was more than 50% this month, the highest among the 31 provinces, suggesting that Yazd residents are more affected by inflation than those in any other province.
The Islamic Republic has been struggling with high inflation since 2019, but the raging inflation since May 2022 has been worse from previous years. Last May, the government eliminated an annual food import subsidy of $10-14 billion, which immediately led to steep price increases. This was followed by a fall in the value of the national currency, making imports more expensive for the population. Iran’s ruler Ali Khamenei has dubbed the current year as “the year of controlling inflation”, a promise also repeated by President Ebrahim Raisi, but reminiscent of similar slogans in previous years.
Economist Ali Sa’dvandi wrote on social media that “The year of controlling inflation concluded with a relative failure in achieving the goal.”
Addressing the Raisi administration in a sarcastic tone, he said, “You controlled the foreign currency market, decreased housing prices, slowed down the rise in the money supply and balanced out the banks’ shortfall in capital... so how did you fail to control inflation?”
When the central bank resorts to printing money without sufficient economic growth or foreign currency revenues, the money supply increases fast, which in turn leads to more currency devaluation and inflation. The biggest immediate reason for printing money is government borrowing from the Central Bank of Iran to bridge its budget deficit estimated to be at 50 percent.
Human Rights Activists in Iran (HRA) published its annual report for 2023 on December 28, in which diverse cases of human rights violations were detailed and categorized.
Spanning January 1 to December 20, 2023, the publication is the result of the collection, analysis and documentation of 9,656 human rights reports from 111 media and legal sources.
Crackdown On Labor Activists
According to the report, at least 2,021 protest rallies were held in Iran in 2023, the majority of which were trade union and labor demonstrations, including 111 labor strikes. Security and intelligence agencies used intimidation, arrests and prosecutions to intimidate labor activists.
Over the past months, protests and strikes have continued in different sectors as the Islamic Republic grapples with growing unrest fueled by unmet demands from retirees and workers.
Toward the end of December, workers at the Esfahan Steel Company halted operations, conveying their discontent through organized gatherings and chanting slogans.
Amidst the labor unrest, the regime-run Statistics Center of Iran (SCI) reported a household inflation rate of 45.5%. Alarmingly, one-third of the country is experiencing inflation rates exceeding 50%, as indicated by the same report.
Ongoing Repression Of Ethnic, Religious Minorities
The HRA 2023 report also stated that 324 people were arrested over their ethnic activism, 19 of whom were given 984 months of imprisonment by the Islamic Republic’s judiciary. In comparison with 2022, the numbers show a 44-percent increase in arrests and a 31-percent increase in prison sentences given to ethnic activists in Iran.
142 people were arrested for religious reasons and a total of 5,113 months of imprisonment were handed down to members of religious monitories in Iran. The HRA went on to say, that 85 percent of the reports regarding rights violations of religious monitories concern the Baha’i community.
In November, the Court of Appeals in northern Mazandaran province sentenced 14 Baha’i citizens to imprisonment and fines.
The Baha’i faith is not recognized as a legitimate religion by Iran’s Shiite clerical regime, leading to systematic and longstanding violations of the rights of Baha’is in the country.
Approximately 300,000 Baha'is reside in Iran, and they frequently document a pattern of regular rights violations. The violations encompass harassment, forced displacement from their residences and businesses, and unequal treatment regarding government employment and access to higher education.
Regime Targets Women Activists
Women activists were also severely targeted by the Iranian government in 2023. HRW reported that 44 women were arrested for their activism for women’s rights and 3,176 were prosecuted by the government over their refusal to wear compulsory hijab.
26 cases of rape and sexual harassment and 82 cases of murdering women were also documented by HRW. The report also stipulated that the Iranian government systematically deprives LGBT and queer groups of their rights.
In September, the Iranian parliament greenlit a bill titled “Protection of Family Through Promotion of Hijab and Chastity Culture.” Initially introduced by the government and subsequently amended by hardliner lawmakers, the legislation outlined penalties, including substantial fines, for women diverging from the prescribed Islamic dress code.
Freedom Of Speech Violations & Academic Repression
Violating freedom of thought and speech, the Iranian regime arrested 3,130 people in 2023 and handed down 25,124 months of imprisonment, according to the HRA report.
Human Rights Activists in Iran also documented 3,067 cases of university students being summoned to “disciplinary committees” at their academic institutions and 23 cases of interrogations by judiciary and intelligence entities outside universities. School students were targeted by a campaign of mysterious chemical poisoning in late 2022 and early 2023. Six thousand such cases of poisonings were reported in 2023.
Many Iranians suspect the mysterious poisoning incidents that affected tens of thousands of students across the country following anti-government protests were orchestrated as revenge by the regime or the religious hardliners it protects. This was perceived as a measure to intimidate and subdue the youth involved in the protest movement. The poisonings began in Qom on November 30, 2022, spreading nationwide until April, leading to hospitalizations and at least one reported death.
The Islamic Republic’s Juggernaut of Executions
HRA also noted that 746 people were executed in Iran in 2023, with 6 being executed in public, with 56 percent of the executions carried out over drug-related crimes and 35 percent over murder.
The United Nations, the European Union, and human right activists and groups have repeatedly voiced concern over the Islamic Republic’s execution juggernaut and its near-record killing spree in 2023.
In October, UN Secretary-General Antonio Guterres highlighted a surge in executions in Iran in a report submitted to the 78th session of the General Assembly.
A comparison with HRW’s 2022 report it becomes apparent that the Islamic Republic has intensified its crackdown against religious, ethnic and gender minorities, and also political and labor activists in 2023.
Ukraine’s military chief, Valerii Zaluzhnyi, said Friday that the Ukrainian air force intercepted 87 of the ballistic and cruise missiles and 27 of the Shahed-type drones overnight. The aerial attack that began Thursday and continued through the night, hitting six cities, including the capital, Kyiv, and other areas from east to west and north to south Ukraine.
Air Force commander Mykola Oleshchuk wrote on his official Telegram channel that it was “the most massive aerial attack” since Russia’s full-scale invasion in February 2022.
At least 88 people were injured and an unknown number were buried under rubble during the roughly 18-hour onslaught, Ukrainian officials said. Among the buildings reported to be damaged across Ukraine were a maternity hospital, apartment blocks and schools.
Ukrainian President Volodymyr Zelenskyy said on X, “Today, Russia used nearly every type of weapon in its arsenal.”
Air Force spokesperson Yurii Ihnat said on air that an attack of this scale "has not been seen for a long time." According to the Ukrainian air force, the previous biggest assault was in November 2022 when Russia launched 96 missiles against Ukraine.
Western officials and analysts have recently warned that Russia had limited its cruise missile strikes in recent months in an apparent effort to build up stockpiles for massive strikes during the winter.
Iran has supplied hundreds of the kamikaze Unmanned Aerial Vehicles (UAV) to Russia since mid-2022, which Moscow has used extensively to target civilian infrastructure and cities.
The drones are also used during massive missile attacks to overwhelm Ukrainian air defenses. The drones are relatively cheap, costing around $20,000 each and Ukraine sometimes has to fire much more expensive anti-air missiles to bring them down.
For years, Iranian administrations have not transparently disclosed their oil revenues, citing the illicit nature of shipments under the US sanctions regime. However, in the past two months, the Raisi government has released some statistics on oil revenues, labeling it the 'transparency of the Raisi administration.
Mohammad Rezvani-Far, the Head of Iran Customs Administration (IRICA), stated on December 27, that during the first 9 months of current Iranian fiscal year, the country's oil exports totaled $26.46 billion, electricity exports were $300 million, and technical and engineering services exports were approximately $780 million.
He referred to the total foreign trade of the country during this period as $112 billion, stating that $63 billions of this amount is related to the total exports of the country, including oil, electricity, and services.
At the same time, Ehsan Khandouzi, the Minister of Economic Affairs and Finance, also confirmed these figures.
Confirmation comes while the figures presented by Minster Khandouzi and the Head of the Central Bank of Iran last month indicated that the total exports of oil, electricity, and services of the country in the first 8 months of the current fiscal year (March 2023 to November 2023) were about $20 billion.
From the official statements of the Raisi administration, it is understood that the average monthly exports of oil, electricity, and services in the first 8 months were $2.5 billion, but suddenly in the 9th month of the Iranian calendar, it surged to over $7.5 billion.
Statistics from industry monitoring firm Kpler show that the volume of Iran's oil exports in the past month not only did not grow compared to previous months but it showed a notable decrease.
Also, tanker tracking companies' statistics show that Iran exports 1.25 million barrels per day of crude oil and gas condensate as well as more than 200 thousand barrels of petroleum products (mazut and kerosene) during the current fiscal year.
The nominal price of Iranian oil is between $80-$85 according to OPEC statistics. Thus, Iran's oil export revenues should have been about $34 billion in the nine-month perios, but the statements of the Head of Customs and the Minister of Economy indicate that this figure is $26.46 billion.
The reason for this lies in Iran's extensive discounts to Chinese oil refineries and the cost of circumventing sanctions, especially middlemen, who arrange the illicit Iranian shipments to China by various methods, including mixing Iranian crude with shipments from other countries, thus hiding their origin.
Iran also barters some of its oil with Chinese goods. However, this amount is included in the country's oil export figures.
The Customs statistics in China show that from April to November (approximately the first 9 months of the Iranian calendar year), China imported about $2.6 billion of non-oil goods and $5.5 billion of exports to Iran. Thus, about $3 billion of Iran's oil exports to China during this period were spent on bartering with Chinese goods.
In the process of bartering oil with goods, a significant part of the value of Iran's oil is wasted due to the costs of dealers and intermediaries.
Service Exports And The Country's Trade Balance
UN statistics show that in 2017, before the US imposed sanctions, Iran had nearly $10 billion in annual service exports, the majority of which was transportation, personal travel, construction services as well as business travel. Iran's service imports were $17 billion as well.
The latest statistics from the Iran Trade Development Organization show that the country's service exports reached just $2.3 billion in 2021, and some scattered statements by Iranian officials indicate that this figure was about $4 billion last year. Now, the statements of the head of Iran Customs show that in the first 9 months of this year, this figure has dropped to $780 million. He did not explain why the country's export of services suddenly plummeted.
The Central Bank of Iran does not separately publish statistics on the export and import of services, but it publishes the statistics of the trade balance of services (the difference between service exports and imports), which has always been around negative five to six billion dollars in recent years.
The head of customs and the minister of economy, without mentioning the existence of the annual negative balance of five to six billion dollars for services, only referred to the statistics of service exports, oil, and non-oil goods and claimed that during the 9 months, the total foreign trade balance of the country was a positive $15 billion.
In other words, in the calculations of these senior officials, Iran had a total of $63 billion in oil, non-oil, and service exports during this period, but only imported $49 billion in goods. The figures presented by the two senior officials of Ebrahim Raisi administration only include the import of goods and do not include petroleum products imports (gasoline), as well as service imports, and it cannot be claimed that the foreign trade balance was a positive $15 billion during this period.
Capital Flight
Central Bank statistics show that, considering oil, non-oil and service trade, Iran's net capital account was a negative $15 billion last Iranian year (March 2022-March 2023). In other words, the outflow of foreign currencies from the country was $15 billion more than the inflow of foreign currencies.
Central Bank statistics show that the country had about $100 billion negative capital account during 2011-2021.
Part of this situation is due to the large gap in the balance of trade in services, but a significant part of it is also due to the efforts of the people to take their capital out of Iran and buy property in foreign countries, especially Turkey, the Emirates, and Western countries.
Reports from the Turkish Statistical Institute show that in recent years, Iranian have been the top buyers of homes in this country. Since the US imposed sanctions against Iran in 2018, Iranians have purchased about 39,000 homes in Turkey.
The purchase of houses and properties is just one facet of capital flight from Iran. Owing to the unfavorable economic prospects within the country, Iranian citizens have embarked on substantial capital investments, diversifying into various forms of real estate and assets abroad.