Tehran: Outside his butcher, south of Iran’s capital, Ali chops sheep carcasses for customers like him who have seen inflation and subsidy reform devour their purchasing power. “My sales have dropped significantly, almost halved,” Ali, 50, told AFP. “What should I say? I’m a butcher and, believe it or not, sometimes I don’t eat meat for a week,” he added. “Everything has gone up.” Inflation is undergoing an unwelcome resurgence worldwide. This is mainly due to the high prices of energy and food caused by the invasion of Ukraine, Russia’s major wheat-producing country, and the associated sanctions on Moscow.

However, according to the International Monetary Fund, Iran has been tackling sharp price increases over the years, exceeding 30% each year since 2018. It sent currency to the tailspin and imposed strict sanctions, even before U.S. President Donald Trump separated Washington from the nuclear deal between Iran and the world’s major powers and unilaterally banned Iran’s oil exports. It was the year I started.

Negotiations last year or so sought to bring the United States back into the deal-under Trump’s successor Joe Biden-and persuade Tehran to re-stick to the nuclear promise it was gradually moving away from. I’ve been trying. However, these subtle efforts have been stalled since March, and escalating spats between Iran and the United Nations nuclear watchdog could reduce the chances of resurrecting the deal.

Subsidies reduce complex misery

After separating the meat fillets, Ali gives the retired civil servant Asgar a sufficient amount of plastic bags for him and his wife. “The price of everything, including meat, has gone up,” lamented 63-year-old Asgar. Now everyone is reducing their purchases-everyone is under pressure. Economic analyst Saeed Laylaz believes that Iran’s price growth rate has exceeded 40% each year since 2018, higher than the IMF calculated.

It is due to the “rapid rise in global inflation” caused by the withdrawal from the war in Ukraine and the enactment of “fundamental reforms” in subsidy cuts by the Iranian underfunded government in mid-May. He says it’s been even more lively these days. Experts who advised President Iran in the past said that President Ebrahim Raisi’s main government policy shift is to abolish subsidized exchange rates for imports of household necessities wheat, cooking oil and medicines. Said.

Introduced in mid-2018, this “preferred” rate was fixed at 42,000 rials per dollar, easing citizens from the barbaric black market depreciation of local currencies resulting from the US withdrawal from nuclear trading. However, the deal has become affordable as the exchange rate in the black market has exceeded 300,000 reals against the greenback and global food prices have skyrocketed.

“If Iran wanted to continue its hard currency reckless spending this year like last year, the country would have needed $ 22 billion at a preferential rate,” he said. “Even if the nuclear deal was revived … the government had to revoke the preferential rates,” he added. According to figures released by the Iranian media, lean meat prices have risen by 50%, chicken and milk prices have doubled, spaghetti has tripled, and cooking oil prices have quadrupled. ..

Protest against price

Hundreds of Iranians went to the streets of several cities to protest rising prices, in addition to months of demonstrations by experts and pensioners demanding inflation adjustments for wages and pensions. .. On Tuesday, Minister of Labor Hojjatollah Abdolmaleki resigned in hopes of “strengthening cooperation within the government and improving the provision of services to people,” according to government spokesman Ali Bahadori-Jahromi. However, the reformist newspaper Etemad linked his resignation to “fierce criticism” from protesting pensioners. The Tehran market is focused on the consequences and impacts of inflation, not the causes of it.

From the beginning, ultra-conservative President Raishi, who took office last August, promised that painful subsidy reforms would not affect bread, fuel and drug prices. Therefore, the demand for bread is increasing. Shaddy, a housewife wearing an Islamic chaddle near a traditional bakery in southern Tehran, said, “The bakery procession is getting longer as rice prices rise and people rely on bread. I did. “

Inside, the bakery Mujitaba agrees. “People … can no longer buy rice, cooking oil, spaghetti, tomato paste,” his face got soaked with sweat while he was resting on his dough preparation. Subsidy reform has so far helped stabilize the black market’s exchange rate, surpassing a record low of $ 330,000 on June 12, retreating expectations for a recovery in nuclear trading. – AFP

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