Inflation increasing in Iran

Reuters

A customer buys Iranian gold coins at a currency exchange office in Tehran's business district October 24, 2011.

Article Highlights

  • Increasing inflation continues to take its toll on ordinary Iranians, making it increasingly difficult to put food on the table.

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  • Given the Iranian rial’s precipitous fall against most major currencies, goods imported into Iran could well have doubled if not tripled in price.

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Increasing inflation continues to take its toll on ordinary Iranians, making it increasingly difficult to put food on the table. Every Iranian household buys bread and tea. According to the chart that follows the original Persian article, the price of bread has increased 38.8 percent, and the price of tea is up over 58 percent. Vegetables and fruit prices increased 70.5 percent and 46.7 percent respectively. Curiously, rice, an Iranian staple, is not included in the statistics provided; last year, the Iran Statistics Center itemized inflation among several different varieties of rice.

The other products most impacted by inflation over the past year include dairy products (51.8 percent), fish (66.7 percent), and tobacco (92.8 percent). Taking a summer vacation, even inside Iran, has also gotten more difficult: Hotel and restaurant prices are up 33.7 percent over last year.

While the official exchange rate—set by the Central Bank of Iran—has remained relatively steady, fluctuating between 12,200 and 12,300 Iranian rials to the U.S. dollar, the gap between the dollar and the rial on the black market—the rate most Iranians use on a daily basis—has grown from approximately 20,000 rials to the dollar in May 2012 to 35,000 rials to the dollar a year later.

Importantly, most of the items for which the Iranian government has published data are for goods and services produced or conducted inside Iran. Given the Iranian rial’s precipitous fall against most major currencies, goods imported into Iran could well have doubled if not tripled in price.

While the Iranian government continues to insist that sanctions do not bite—and, indeed, inflation inside may be rooted more in poor management than sanctions—the continued inflation in basic foodstuffs and commodities suggest that life in Iran is becoming steadily more difficult.

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  • Michael Rubin is a former Pentagon official whose major research areas are the Middle East, Turkey, Iran and diplomacy. Rubin instructs senior military officers deploying to the Middle East and Afghanistan on regional politics, and teaches classes regarding Iran, terrorism, and Arab politics on board deploying U.S. aircraft carriers. Rubin has lived in post-revolution Iran, Yemen, both pre- and post-war Iraq, and spent time with the Taliban before 9/11. His newest book, Dancing with the Devil: The Perils of Engagement examines a half century of U.S. diplomacy with rogue regimes and terrorist groups.


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