News : Economy
Iran: Another shock to Iran’s economy with the 20% to 30% hike in prices of water, electricity and gas
- Published: Tuesday, 01 April 2014
Following a rise of 24% in the price of electricity and a 20% hike in the price of water in Iran, Mullah Rouhani’s deputy announced government’s act for a 20% to 30% hike in the price of gas.
Tasnim news agency (affiliated with the Iranian Revolutionary Guards) reported on March 31 that Rouhani’s cabinet has announced: “Gas prices for households will increase by 20% and for public consumption will go up by 30%.”
Hamidreza Fouladgar, member of Majlis, noted the unsuitable economic condition of the people and the inflation and stagnation and warned of people’s protests against the price hikes in case the economic situation does not improve.
According to remarks by regime’s economic analysts (Melliyat): “The steep slope of prices for energy products can deliver yet another shock to the Iranian economy and create a catastrophic inflation. While the government and the Majlis insist on increasing the price of energy products in an Iran with a high inflation rate in the past few years, the hike in the energy products in the new Persian year can amplify this inflation. While steep inflation has markedly reduced the purchasing power of the people, the increase in energy products will result in reducing their welfare. Various researches in recent years show that the increase in energy products will increase the cost of production that will sharply increase the inflation.”
Ali Qanbari, a university professor and an expert in economy of Iran, said: “In a country such as Iran with considerable energy resources it is expected that the consumers would be able to have an income generating condition. In other words, if we ignore the income and people’s purchasing power and just attempt to achieve equilibrium in the market by increasing the prices, we shall face problems and create various social issues and damages.”
Dr. Hossein Raghfar, a university professor in economy, said: “Naturally, in the present situation of inflation and stagnation, the outcome of a new hike in energy products will cause an even greater damage with respect to the first period. The social consequences of this measure are horrendous and will result in an increase in the crime rate, narcotics, divorce, and psychological depression. An increase in the price of the energy products, even if managed the best possible way, shall bring along a sharp increase in the prices. Surely, the prices will jump by at least 70% and many will go broke.”
Finally one must say that in recent years, on the pretext of making economic parcels objective by increasing the cost of energy products and the basic items, and the increase in inflation rate, difficult conditions have been imposed on the people. Meanwhile, while many productive units enjoy a low interest rate because of the unsuitable economic conditions, a hike in the price of energy products will intensify the depression and will result in further decrease in economic growth rate and increase unemployment.
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