Page 21 - IRANRptOct22

Iran’s wheat subsidy cut triggers dramatic flour price rise ‘that could spark social unrest’
government policy in the currency market that has increased the prices”.“
As always,” he added, “inflation remains a monetary issue. The Iranian government has been increasing the money supply to compensate for the loss of oil revenues and economic activities. The Raisi administration claims it has solved a budget deficit of 4,800 trillion IRR (the equivalent of 17.5 billion USD) without borrowing from the Central Bank of Iran (CBI) or increasing the money supply. However, the CBI has not yet published its monetary data for the winter of 2022.
The blow to Iranian consumers came a day after Iranian oil and petrochemical workers began a strike for higher wages, with their industries becoming the latest of several in Iran to be plunged into turmoil by cost-of-living protests. Teachers, stone factory workers, public employees, taxi drivers and bus drivers are among groups that have lately taken to the streets protesting at poor pay and work conditions, while there have also been substantial protests at low pensions mounted by pensioners across the country.
The Coordinating Council of Protests of Oil Contract Workers was reported by Radio Farda as saying that employees at the Tehran Oil Refinery were continuing their protest against an increase in working hours and low wages, while drivers and workers at the West Oil and Gas Exploitation Company gathered at the company's location in the western city of Dehloran saying they hadn't been paid in months.
Many of the protests have been met with aggressive security crackdowns. According to SCI inflation report, price growth in food, beverages and tobacco grew by 32.2 pp to 81.6% in June, while nonfood goods and services prices moved up by 2.8 pp to 36.8%.
A dramatic rise in the price of flour in Iran is reportedly leading to concerns that the authorities' recent decision to halt subsidies for imported wheat could lead to social unrest.
The government ended subsidies for imported wheat on May 1. The cost of flour subsequently soared by around 500%. The price is expected to rise further, meaning even more pain for consumers dealing with rising bread, pasta and other flour-based product price rises.
RFE/RL reported on May 6 that the Student Basij, a subgrouping of the Basij militia that is a branch of Iran's Islamic Revolutionary Guard Corps (IRGC), has issued a stark warning to hardline President Ebrahim Raisi.
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.
21 IRAN Country Report October 2022 www.intellinews.com