Iranian living standards in times of high inflation
The Iranian year 1401 (2022/2023) was exceptional in several respects. It was the first full year of President Ebrahim Raisi’s administration (August 5, 2021 to present), which proposed a new revolutionary vision that at long last would fulfill the promises of the 1979 revolution. It was also the year that the currency fell precipitously, by 52%, and prices registered a record rate of increase (300% annual rate in June 2022). The rapid increase of prices in the early part of the year, a result of the removal of food subsidies and the Russian invasion of Ukraine, raised fears of hyperinflation, which turned out to be highly exaggerated, as inflation moderated and settled at 45% for the year. Critics of the hardline president predicted that Raisi’s economic policies was severely hurting the poor and the middle class. We finally have the data to find out if they were right.
(more…)Rising poverty and falling living standards in Iran in 2020
The Statistical Center of Iran (SCI) has released the micro data from its most recent annual Household Expenditure and Income Survey (HEIS) for the Iranian year 1399 (21 March 2020 to 20 March 2021). The results do not surprise — the downward slide in living standards and the rise in poverty that started a decade ago continues. Along with the more positive news on the GDP and employment front that have become available in the last few weeks, the survey offers a relatively accurate if mixed picture of a country and a people struggling under the Trump-Biden maximum pressure campaign. Relative to household welfare, the economy is doing better. GDP grew by 3.6% last year and last quarter (spring 2021) 200,000 more people were working compared to a year ago. This makes perfect sense since falling real wages that are hurting welfare are good for employment and production.
(more…)Cash transfers increase after Iran protests, but do they make a difference?
The gasoline price hike of November 15 triggered widespread violent protests in Iranian cities. Three days later the government announced that it would increase the amount of cash transfers to compensate for the price increase and soften its blow. But do the new transfers adequately compensate for the gasoline price increase? My estimates below show that they more than compensate those in the bottom 40 percent of the population — generally considered to be the vulnerable part of the population — while the top 40 percent lose. Most people in the middle break even.
The poor and the gasoline price hike
Since the announcement of the gasoline price hike on Friday November 15, events in Iran have taken a tragic turn with loss of life and destruction of property. They also took a perplexing turn. Three days after the price increase and the vague promise of cash compensation for the price hike, on Monday the government announced it was putting the promised money into people’s bank accounts. If the compensation scheme was ready, why not announce it with the price increase? I am not sure if it would have prevented the unrest altogether, but at least there would have been one fewer grievance. (more…)
Fact checking the meat consumption of Iranians
The rapid increase in the price of meat in the last few months has turned this food item of dubious health value into the lightning rod for the suffering of Iranian consumers. Viewers of the BBC Persian program may recall a stark graphic that purported to show that the amount of red meat that a minimum wage worker could buy has declined from 74 kg per month in 1357 (1978) to 10 kg in 1397 (2018). (more…)
A note on measuring living standards
A few weeks ago, in this blog and in opinion pieces (here, here and here), I argued that during the three decades since the end of the war with Iraq (1988), Iran’s economic growth exceeded that of Turkey, such that by 2012, when US sanctions intensified, living standards in the two countries were very similar. My analysis, which surprised some and angered others, is because of the particular data I used to measure GDP per capita (which I also refer to as the living standard). GDP comparison is not rocket science but most journalists (and even many economists) often get it wrong. So, in this post I try to explain why it is important that we use data specifically intended for such comparisons.
Has Iran’s inflation peaked?
Last June, I wrote on this blog about the return of inflation in Iran, when inflation had jumped from an annual rate of 18 percent in April 2018 to 34 percent in May. In more recent months, inflation has been running at an annual rate of 78 percent per month, twice the rate in May. But, for the past two months, October and November, the monthly rate has declined. Is this a sign that the current phase of high inflation, which started with the collapse of the rial, is about to end? Containing inflation is critical if Iran is to convince its citizens that economic stability is returning and that the news of hyperinflation and economic collapse are exaggerated. (more…)
Food consumption of the poor in Iran
It is now clear that the purpose of US sanctions against Iran is to make its people miserable enough so they pressure their government to agree to US demands. One obvious response to this strategy is for the Iranian government to shift resources to groups most likely to feel and transmit these pressures. If the government has a such a plan, who to protect and how, it seems lost in the chaos of the exchange rate market and reshuffling of government ministers. Perhaps the past can be a guide: how did Iran manage the last phase of sanctions, when, in July 2011, President Obama ratcheted them up.
Poverty and living standards in Iran after the nuclear deal
Many observers in the West have been quick to blame the recent unrest in Iran on high and rising poverty, which is in turn seen as a failure of the Iran nuclear deal (also known as the JCPOA), or the squandering of its windfall. President Hassan Rouhani sold the nuclear deal to voters, who have elected him twice, as the only way he could improve their lives. The unrest taking place in Iran’s smaller cities suggests that this promise is far from realized. As I have written before, there is little doubt that the economy rebounded after JCPOA, but did poverty and the living standards of ordinary Iranians also improve with this economic recovery? (more…)
Trends in poverty and income inequality and Iran election debate
This is not my first post on poverty and inequality in this blog, but I feel I need to update my previous posts on these topics because of the confusing stuff said about them by the presidential candidates. Thanks to the availability of surveys of household expenditures and incomes, we know quite a bit about both poverty and income inequality, but everyone who uses these data does not come to the same conclusion. I have read frequently that cash transfers have increased poverty, a claim that challenges common sense and the available evidence. (more…)
Tyranny of numbers 
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