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issued a stark warning to hardline President Ebrahim Raisi.
"We strongly inform you that society is not prepared for such a sudden increase in prices at this level," the group said in a May 5 statement. "The turmoil in the markets in recent weeks, and especially the shocking decision by the Agriculture Ministry to increase the price of flour for industrial producers, could have social consequences and unrest."
The move to end subsidies was a "serious shock" to trades and industries that depended on subsidised wheat and flour, added the statement, which also advised the government to not make such decisions without taking into account public opinion first.
Inflation in Iran—the most sanctioned country in the world prior to Russia facing waves of sanctions in response to its invasion of Ukraine—is officially running at around 40%. It is thought to be even higher for food. Iranian media have reported that the price of rice, which has recently moved up by around 130%, has already driven many consumers to alternatives like bread. Bean prices, meanwhile, are said to be up by around 120% and cooking oil and sugar prices have also gone up.
Drought-hit Iran has become increasingly reliant on imported wheat. Mohammad-Reza Mortazavi, head of Iran's Flour Producers Association, said on May 2 that the country was more dependent than ever on foreign grain. He said it would have to import more than 20mn tonnes of grain in 2022. With global wheat prices soaring amid impacts of the Ukraine war—Ukraine has millions of tonnes of wheat unable to leave ports due to Russia’s blockade—sourcing enough of the commodity at reasonable prices has become a huge task.
The Iranian state has spent roughly $8bn a year since 2018 on subsidising food imports to offset inflationary pressures on the populace; however, in recent months the accumulated stresses caused by US sanctions—including the blocking of Tehran’s assets abroad by the threat of secondary sanctions aimed at international financial system players—have left the government’s coffers decidedly bare.
If the cheap dollar rate was entirely eliminated, prices across the country in the wholesale market could increase by five to six times.
21 IRAN Country Report June 2022 www.intellinews.com