- Published: Wednesday, 25 December 2019
The Statistical Centre of Iran recently released a report about incomes and economic conditions of Iranian families after the gas price hikes in mid-November. The report reveals that the expenditure of the livelihood basket, in comparison to last month, has raised by 4.1 percent among lower-income deciles.
While the rich segments of the society, who don’t even receive government aids, only faced a 3.1-percent increase in the expense of their needs. Analysts argue the economic shock that took place by the fuel price hikes caused catastrophic results in the livelihoods of poor and low-income people. In addition, the monthly inflation of basic needs like food and drink has raised by 6.9 percent for the poorest decile of the society. however, the figure for the rich decile is estimated to rise by 2.9 percent alone. Growth of transportation cost is another impact of the gasoline price rise on Iranian families’ livelihood basket. In the transportation sector, inflation is estimated at 14.7 percent across the country, 14.1 percent in urban areas, and 17.9 percent in rural areas.
The Growing Trend of Point to Point Inflation Rate in Iran
The latest report of the Statistical Centre also shows that between October 20 and November 20, the monthly inflation rate was 1.6 percent, while it rose to 3.2 percent during November 20-December 20 periods. The point to point inflation rate also increased by 0.8 percent in the same period. Notably, the increase of the monthly inflation index to 3 percent is the highest inflation rate since March until now. In addition, before raising the gas price, the country was experiencing a decrease in point to point inflation index. However, the recent spike of gasoline price changed the trend from a shrinking to growth.
The Impact of Raising the Petrol Price in Iran’s Inflation Rate
Factually, the diversion of these factors, monthly inflation index and point to point inflation rate, displays the impact of the gas price hikes on the country’s inflation. In this context, economic experts envisage that the impact of raising the petrol price will emerge in upcoming months. Earlier, the chief of the Central Bank of Iran estimated the maximum impact to be 2 percent, and he said that it is expected to contain some part of this amount if the currency and money market remain stable. However, its prospects that given the stability of the government financial system and Central Bank monetary system, the inflation rate will reach 35 percent by the end of next year.
Rural Inflation Surpasses Urban Inflation
The latest report of the Statistical Centre says that from November 20 to December 20, the average growth of prices of consumer goods and services in urban areas of Iran was 3 percent in comparison to the previous month in the Persian calendar. This figure was 27.6 percent during the same period last year and 39.3 percent during the past twelve months. Meanwhile, the inflation growth in Iran’s rural areas was 4.2 percent in proportion to last month, 28.9 percent toward the same period in the last year and 43.9 percent during the past twelve months.
The Pressure of Inflation on Needy Strata of the Iranian Society
In this regard, the needy segments of society bear more economic pressures. The report declares a 4.1-percent increase in the expenditure of livelihood basket of low-income people, who classify as the tenth decile. However, rich people, who consistently remain in the first decile, face the lowest figure of rising prices by 3.1 percent toward their goods. The poor and low-income people deal with a 6.9-percent increase in prices of food and drinks, while the first decile faces less than half of this amount—2.9 percent alone.
Spike of Inflation through Transportation Channel
The report of the Statistical Centre of Iran portrays the genuine impact of raising the gasoline prices on the country’s official inflation. Statistics show that the decision made by the heads of branches caused the prices of the transportation sector to rise by an estimated 14.7 percent. Notably, transportation accounts for 9.41 percent of Iranian families’ livelihood basket. Therefore, it is forecasted that the consequences of fuel prices spikes will be repeated in the transportation sector. It is significant that raising gas prices in the transportation sector caused more effects in rural areas rather than urban areas.
The Impact of Inflation on the Iranian People’s Capacity in Purchasing Food and Drinks
According to the official narrative of the statistical institute of Iran, the average price of food and drinks has increased by 4.2 percent compared to the last 30 days. It also experienced a 28.7-percent rise in comparison to the same period in the previous year, in addition to the 55.7-percent increase of prices toward last year.
In conclusion, contrary to officials’ statements who were vowing that raising gas prices won’t affect other prices, the society is dealing with a relentless increase in prices of essential needs. Therefore, needy segments of Iran’s population should bear more discrimination and economic pressures. In such circumstances, any mistake by the rulers is potential to trigger another round of protests that may eradicate the pillars of the 40-year corrupt ruling system.
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