Food Prices Surge in a Year Marked by War on Iran
Last week, the Statistical Center of Iran published its inflation report for Esfand (ending March 20), the final month of the Iranian year 1404. Despite the record-high inflation reported for the year, its most noteworthy fact is its release amid heavy bombing by the United States and Israel. It is a reminder of the resilience of the Iranian spirit—not only on the battlefield, but also in maintaining the state’s core functions on schedule. Perhaps more damaging than the destruction of the country’s physical capital is the erosion of its institutions, of which the production of accurate statistics—even when politically inconvenient—is essential and far harder to rebuild.
The report shows a sharp increase in the CPI—5.6% in Esfand alone (about a 92% annualized rate). This reflects the continued effects of exchange rate unification last November, compounded by wartime conditions that have prevailed since June. Inflation has accelerated over the past three months, reaching as high as a 193% annualized rate a month ago. As a result, point-to-point inflation for 1404 reached 90.2%, while average annual inflation—the more commonly cited measure—stood at 54.1%, the highest in recent memory.
Food prices led the increase, rising roughly sevenfold over the year, compared to a 90% increase in the overall price level. This divergence is largely explained by the elimination of foreign exchange subsidies for food and medicine, as well as increased public expenditures associated with the war. When food prices outpace general inflation, poverty rises and income distribution deteriorates. The persistent surge in food prices likely compelled households to reallocate spending away from non-food items, adding to the pressure of inflation.
Looking back at inflation over the year, the draft budget for 1405—unveiled last fall and proposing an average wage and salary increase of just 20%—now appears highly unrealistic. Although it was later adjusted upwards, the initial disconnect between nominal wage adjustments and actual inflation is one of the factors that others and I have noted behind the protests that fueled the December 28 protests.
Household Survey Data Reveal Modest Gains in Iran’s Living Standards for 2024/2025
The recently released microdata from Iran’s Household Expenditures and Income Survey (HEIS) offers valuable insights into household economic conditions across the country during the Iranian year ending on 20 March 2025 (Iranian year 1403 or 2024 for short). This post updates my earlier post on Iranian living standards in 2023.
(more…)Iran’s Investment Puzzle: Diverging Data, Converging Concerns
In a recent post, I discussed the rising standard of living in recent years and questioned how that could persist while the share of investment in GDP has been falling. Not only has it been falling, but to levels that seem inadequate for maintaining the capital stock—and with it, the quality of essential services like electricity. This is clearly unsustainable. If investment drops below 10 to 15 percent of GDP, the country would essentially be consuming by running down its capital—much like a household that sustains itself by selling off its furniture.
(more…)Trump’s return shocks Iran’s currency and prices
With Trump’s return to power, Iran is bracing for another round of maximum pressure. The rial has already fallen by one-third in the unofficial free market since last November, when his victory was announced. As before, the sharp devaluation has quickly translated into higher prices and rising social tensions.
(more…)New data reveal rising living standards in Iran
The latest data files for the 2023/2024 (1402) Household Expenditure and Income Survey (HEIS) just became available on the website of the Statistical Center of Iran (SCI). SCI had already published its summery results (in Persian) a couple weeks ago, showing considerable increase in nominal incomes (53.9 and 51.4 percent for urban and rural households, respectively) and expenditures (55.9 and 45.4 percent). Given the year’s inflation of about 40%, these numbers indicate considerable increases in real incomes and expenditures.
(more…)Declining Poverty Under Raisi
The hottest topic in Iran’s impromptu presidential election is economic justice, with inflation a close second, the two topics on which the interests of the poor and the middle class diverge. The tragic death of President Raisi last month has thrown Iran into a contentious election debate in which the performance of his administration is a central issue. Raisi made many promises, most of which had remained unfulfilled at the time of his death. Promises for one million new jobs and one million new homes each year are well below target, as are bringing inflation down and preventing Iran’s currency slide. These failures might have been avoided had he succeeded in his other goal of ending US sanctions.
(more…)Good economic news fails to impress Iranians as they go to the polls
Two pieces of positive economic news were published last week, continued economic growth last fall and lower inflation for the Iranian month of Bahman that ended on February 20. You would think that days before the elections for the parliament and the Assembly of Experts on March 1, they would attract attention and scrutiny. But in Iran public opinion about the economy and elections have moved beyond facts and data. Public opinion because people dismiss official news about the economy as propaganda, and elections because, thanks to heavy vetting, only one side appears to have a chance of occupying the most seats in the two assemblies.
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Tyranny of numbers 
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