Inflation in Iran; Four more food items become more expensive

The Iranian Interior Minister announced that the prices of chicken, eggs, dairy products, and oil will increase by 4,200 tomans due to changes in the allocation of foreign exchange. The head of the Planning and Budget Organization, acknowledging the deepening class gap, said that flour will be distributed at a support price until further notice.

On Tuesday evening, May 10, officials of the 13th government gave explanations in separate television programs about the rising prices of basic goods and the elimination of preferential currency.

The head of the Planning and Budget Organization assured that the prices of bread and medicine would remain stable, and noted that no decision had yet been made on fuel. Interior Minister Ahmad Vahidi announced that the prices of eggs, chicken, oil, and dairy products would also increase with the targeted subsidies, promising that the price hike would be limited to these four items.

Vahidi said: "No other product has the right or permission to become more expensive, and of course they don't have permission to make it more expensive."

He stated that the price hike will not spread to transportation and that consumers will receive subsidies for the increase in the prices of the aforementioned items: "Drivers do not have the right to increase fares and cannot increase their prices under the pretext of the increase in the prices of these four items."

Masoud Mirkazemi, Vice President and Head of the Planning and Budget Organization, also provided detailed explanations about the approvals of the "Popularization and Fair Distribution of Subsidies Headquarters" and the method of paying livelihood subsidies.

Mirkazemi said that the government subsidy will be paid for two months and for basic goods other than medicine and bread, adding: "Goods based on the 4,200-toman currency are still being distributed in the community, and the pricing must change."

The "subsistence subsidy" in packages of 400,000 and 300,000 Tomans was deposited into citizens' accounts on May 19, and according to domestic media, it covers 23 million households; a figure equivalent to 72 million people out of Iran's 85 million population.

Mirkazemi said that from the following months, this aid will be paid only once in a “massive” manner so that families can manage how they consume it themselves. Deputy Ebrahim Raisi promised that the price of bread will not change and that bakeries will continue to operate as before until further notice. IRNA news agency quoted Mirkazemi as saying: “Now, a subsistence subsidy has been paid to the three lowest income deciles, and all deciles are still equal for medicine and bread, and if someone gets sick in the hospital, insurance will support them. Medicine and bread are supported as before.”

In explaining the price increases, he pointed to the impact of the Ukrainian war on the prices of corn, wheat, barley, and oilseeds, and suggested that this trend and market volatility could continue for up to three years.

Bad government, good government

Ebrahim Raisi, who called his government “the one true to the promise,” emphasized in his latest television interview that the prices of bread, medicine, and gasoline will not increase at all. He announced that subsistence aid will be paid for two or three months until the electronic goods register is ready.

Mirkazemi held the Rouhani government responsible for spending $8 billion on basic goods and praised Raisi's cabinet, saying: "The previous government had acted in a way that the reserves of basic goods were 30 to 70 percent less than the minimum required, and had also spent $8 billion on basic goods. But when the 13th government came to power, it secured the reserves of basic goods."

The head of the Planning and Budget Organization acknowledged that the class gap in society has intensified and that despite the allocation of preferential currency and direct subsidies, the Gini coefficient has reached 4 tenths of a unit. He promised that the government has a plan to increase this coefficient to 35 hundredths of a unit and eliminate complete poverty: "The production of chicken and eggs uses the most imported inputs, and less is used in the distribution of red meat and dairy products. Subsidized currency is allocated for edible oil and wheat. At this stage, medicine and wheat will receive subsidies as in the past, and in the future, insurance will be equipped and the list of medicines covered by insurance will increase."

He announced that no decision has yet been made regarding fuel, adding: "We have no legal obligation."

The efforts of officials of the 13th government to calm the anger caused by the price spike come at a time when Mohammad Baqer Qalibaf, the Speaker of the Parliament, in a rare criticism, severely questioned the government's approach to the issue of pasta and flour, and while defending the return of coupons, said: "Essential daily necessities should be given to the people with electronic product lists at the prices of Shahrivar 1400."

Source: DW