Iran has been grappling with a severe economic crisis for several years, and in 2023, the country witnessed an alarming surge in food inflation.
According to official statistics from the Iranian Statistics Center, the food inflation rate has surpassed 70%, highlighting the unprecedented challenges faced by the nation.
The economic measures implemented by the 13th government aimed at improving subsidy distribution inadvertently led to skyrocketing food prices, negatively impacting the livelihoods of Iranian families.
Although Iran has been plagued by high general inflation since 2018, the current food inflation rate in 2023 distinguishes itself from previous years.
The implementation of economic reforms in May, primarily focused on addressing subsidy distribution, inadvertently triggered an unprecedented surge in food prices.
The removal of the preferential currency exchange rate of 4,200 tomans to the US dollar by the 13th government occurred at a time when inflation was already above 40%.
While officials justified the inflation partly due to the distribution of the 4,200 toman currency, the removal of this preferential rate threatened the livelihoods of Iranian families, exacerbating their economic woes.
As a consequence of the economic situation and the escalating inflation rate, Iran’s middle class is gradually sliding toward lower income brackets, while poverty levels continue to rise. Published data reveals that poverty has infiltrated the fourth and fifth deciles, a direct result of inflation.
The root causes of high inflation can be attributed to various factors. Still, the underlying structural issues indicate that the regime’s economic policies to cover the budget deficit plays a significant role.
Failure to adhere to fiscal discipline by successive governments has placed immense pressure on the economy, necessitating the implementation of various monetary and financial policies that inevitably lead to price effects on goods and services, ultimately driving up inflation.
One notable indicator of this trend is the devaluation of the national currency and the depreciation of the rial against foreign currencies.
Despite the alarming rise in food prices and the deteriorating economic conditions for Iranian households, the regime’s authorities have refrained from addressing this matter directly, potentially due to the increased financial burden it would entail.
However, unofficially, the Supreme Labor Council has undertaken calculations to evaluate the livelihood portfolio in accordance with Article 41 Note 2 and its impact on determining workers’ wages.
Currently, the agreed-upon index and weight of items in the consumption basket suggest that the minimum subsistence level exceeds 18 to 20 million tomans.
Last February, the Supreme Labor Council established a consensus that the livelihood basket amounted to 13.9 million tomans.
However, significant price hikes since then indicate that the cost of living will likely continue to rise, particularly for essential goods, pushing the minimum subsistence level beyond 18 million tomans.
One of the consequences of the growing poverty among the middle class is the exodus of physicians from the country, as reported by the state-run daily Faruru on June 7, 2023. This daily wrote:
“Doctors and nurses have decided to emigrate, and it can be said that for the first time in the history of the country, we are witnessing such rare and unprecedented separation.
“If in the past, most of the immigration was limited to general doctors, now specialist and sub-specialist doctors are outpacing the general doctors. More than 800 ‘midwives’ have traveled abroad in the past year alone.
A situation where statistics indicated the migration of only 8,000 doctors and nearly 10,000 nurses until 2020, according to statistics announced by Hossein Ali Shahriari, the head of the Health Commission, in the last two years, nearly 10,000 doctors, most of whom were specialists and sub-specialists, have left the country.”
