Food prices skyrocket in Iran

Article Highlights

  • Most Iranians are not particularly political, though 10 percent participated in the 1979 Islamic Revolution.

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  • Economic issues motivate Iranians to action: the labor movement is growing and government nepotism is a frequent complaint.

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  • Iranian staples, rice, tea and greens, have all shot up in price recently.

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  • Per capita income in southeast and northwest Iran is below $4,000.

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  • The Iranian rial’s record decline is a result of sanctions on Iran’s Central Bank and fiscal mismanagement.

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Editor's Note: FMSO’s Operational Environment Watch provides translated selections and analysis from a diverse range of foreign articles and other media that analysts and expert contributors believe will give military and security experts an added dimension to their critical thinking about the Operational Environment.

Source: "Jadul-e Qeymatha be ravayat-e bank markazi” (“Table Prices According to the Central Bank,”) ATY News. 4 June 2012.

Michael Rubin: Most Iranians are not particularly political. While 10 percent of the population participated in the 1979 Islamic Revolution—a huge proportion in the pre-Facebook, pre-Twitter era and one which stands in sharp contrast to the 1 percent of the population which historians say participated in the American Revolution—economic issues can motivate them to action. The labor movement is growing in Iran in reaction to unpaid back wages, and both government nepotism and profiteering by government officials remain a frequent source of complaint in Iranian teahouses and blogs.

While many prices have declined in the past week—a seasonal phenomenon—the huge jump in the price of basic foodstuffs over the past year should worry the Iranian regime. Rice, tea, and greens are staples of Iranian cuisine; all have shot up precipitously in price. While the Iranian government claims a per capita income of $13,000, wealth distribution is uneven, and many Iranians, both in the countryside and among the urban poor, live on a fraction of that. In the southeast and northwest of the country, for example, per capita income is below $4,000. If Tehran, Markazi, and the oilproducing provinces of Khuzistan and Hormuzgan are omitted, then per capita income is below $9,000. When income is below $1,000 per month, spending almost $7 (at the official exchange rate) per pound for beef is quite onerous.

The rise in food prices may also reflect the decline in the value of the Iranian rial, which, as of March 18, 2012, was valued officially at 12,260 rials per dollar, but which could be purchased on the street at 19,050 rials. The record decline of the rial is both the result of sanctions—after the United States sanctioned Iran’s Central Bank, the value of the rial plummeted—and also the Iranian government’s own fiscal mismanagement. Still, while the decline in the rial relative to foreign currencies might be expected to send up the price of imported goods, it does not explain the rise in such domestically-produced goods as rice, peas, apples, and yogurt. The only prices to decline are potatoes, peaches, and eggs, and these are not enough for Iranians to subsist upon. As the government seeks to replace subsidies with cash payouts, it risks even higher inflation into the coming year. The risk for the Iranian government is that even short-term spikes in food prices can lead to limited civil unrest. During the winter of 2007-2008 a record cold snap led to a 200-700 percent spike in bread prices across northern Iran. This, in turn, led to riots, which forced the regime to deploy security forces into the streets. Dismissing economists who warned him that war and ideological fervor threatened to sink the Islamic Republic, Ayatollah Khomeini famously quipped, “You can’t have a revolution over the price of a watermelon.” Should even the price of this again increase 12 percent, however, Iranians may increasingly test Khomeini’s theory.

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