Cartoon by Robert Rousso

Inflation runs rampant in Tehran

By Leila Gharagozlou

CNBC: As U.S. sanctions on Iran extend into a second year, Iranian citizens are paying the price with skyrocketing costs and food shortages.

Jafar Ghaffari, a cook in Tehran, is one of the many Iranians struggling to keep up with the rising cost of food. He says prices have increased by 50% to 100% in the last year.

Ghaffari says his weekly shopping trip, which cost him 7 million rials [$50] just three months ago, now costs him 14 million rials ($100) a week, nearly half the average Iranian’s salary.
 

The constant price increases have caused instability for families trying to budget for rent and food. Profiteers pump up prices, and consumers rush to stock up before the next price hike. “Nothing is certain. You’ll see something [priced at] 220,000 rials, and tomorrow [it’s] 300,000 rials,” Ghaffari said.

It has been over a year since President Donald Trump pulled out of the Joint Comprehensive Plan of Action, the nuclear accord designed to keep Iran from developing a nuclear weapon, leaving Germany, France and the United Kingdom to attempt to uphold the agreement with Iran.

The Trump administration also imposed a number of sanctions that have focused on targeting Iran’s economy by cutting off its oil revenue and ability to trade with Europe and Asia. Currently, Iran’s oil exports have dropped from 2.5 million barrels a day to about 500,000 barrels a day due to the pressure from sanctions, according to Tanker Trackers data.
Monthly salary of $220

Unable to realize the economic benefits of the nuclear deal, Iran is facing high inflation, a devalued currency and an economy that the International Monetary Fund predicts will shrink by 6% this year. The Iranian government has found its hands tied as prices on foods climb higher, pricing out the population, whose average monthly salary of 32 million rials equals only $220.

In 2018, the rial lost nearly 60% of its value. With less buying power (the exchange rate for the dollar on the free market is 145,000 rials), Iranians are finding they can’t stretch their paychecks anymore.
Premium: Dollar and Iranian rial with greek euro notes
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Younes Ali, a shopkeeper in one of Tehran’s affluent neighborhoods, said he’s raised prices on everything from milk and pasta to canned tuna. Tuna prices have gone from 25,000 rials to 190,000 rials, while the price of pasta has gone from between 18,000 and 25,000 to nearly 60,000 rials.

One reason for the increases: import prices. Tuna cans are assembled abroad, and the material is expensive. Ali said he’s lucky, as he still gets business; others down the street have been forced to shut their shops and leave Tehran.

Over the past year, the government has tried to tackle the problem through subsidies and price regulation. But years of economic mismanagement by the government have left Iranians skeptical of the new tactics >>>