Unprecedented Increase in Poverty in 1402

Unprecedented increase in poverty in 1402

According to Iran Gate, the unprecedented increase in poverty in 1402 has caused many people to look worriedly at the year 1402 and expect much more difficult days to meet their basic needs.

Looking at the recent inflation figures and their correlation with recent fluctuations in the exchange rate does not bode well for the Iranian economy. Many economists believe that the government of Ebrahim Raisi, with its lack of proper and scientific economic management, has brought the country to a point where even government supporters have lost hope for improvement.

Optimistic prediction about inflation on New Year’s Eve

Measuring inflation in various scenarios indicates that the living conditions of Iranians will worsen significantly in the early days of 1402. Economists from various ideological backgrounds believe that even in the most optimistic scenario, an inflation rate of less than 50% for the night of the Persian New Year is far from expected.

Even experts who have supported the government’s economic policies are predicting a 49% inflation rate for the Persian New Year of 1402. If such inflation is realized in Farvardin 1402, it would mean breaking the inflation record in the past 30 years. However, we should not forget that the coincidence of Norouz and the month of Ramadan can also play a role in exacerbating inflationary pressures.

In other words, two time periods that are traditionally known in Iran’s economy as periods of price hikes will coincide this year, which can further intensify the inflationary pressure on the market. However, some also believe that this calendar alignment is one of the lucky coincidences for the government. Instead of inflationary pressures occurring in two different time periods, they will happen simultaneously in Farvardin, which can mitigate the impact of repeated price shocks on the middle and low-income segments of society.

People’s pessimistic outlook on the Norouz of 1402

However, some other economists, who happen to be in the majority, report the realization of inflation rates of 57 to 59 percent in Farvardin 1402. In other words, it can be said that most economic experts and analysts believe that Iranian households will start the year 1402 with an inflation rate close to 60 percent, which means that the situation will worsen even more for citizens.

According to the belief of this group of experts, if the price growth of goods and services continues on the same path as recent months, the monthly inflation at the end of this year will be at least 35 percent and at most 4 percent. If this scenario is realized, a point inflation between 57 to 59 percent will be recorded in the current month. If these statistics are also achieved, the annual inflation of 1401 will exceed 50 percent, which is unprecedented in the past 30 years.

People are expecting an expensive Nowruz.

The average monthly price growth in the 21 months that the thirteenth government has been in charge of the country has been more than 33 percent. If we only consider a 02 percent increase for this index in 1402, we should expect a point inflation of more than 55 percent for the next year. Consequently, the annual inflation will also be more than 50 percent if this scenario occurs.

However, considering the price fluctuations of essential commodities in the market, it can be said that food items still have the highest inflation rate in Farvardin 1402. After food items and tobacco, the next concern is housing, which has become the biggest problem for Iranian households. It has even led to reverse migration from major cities to towns and even villages. Although some believe that this migration can solve the problem of population concentration in the capital and metropolitan areas, considering how citizens are pushed to the outskirts, the destructive consequences of this type of migration will far outweigh its benefits.

The automotive and transportation sector is also another category of consumer goods that is facing significant price hikes. Currently, some domestically manufactured vehicles are being traded in the market for over one billion tomans, which is even unbelievable for the most pessimistic observers. However, the continuation of the current conditions can exacerbate this situation and consequently lead to further increase in the cost of vehicles and transportation services.

Increasing wages slows down inflation.

Considering the bitter experience of Iranian workers and employees in dealing with inflation, it can be predicted that in the year 1402, there will be increased pressure on household heads. This is because the devaluation of the national currency will far exceed the increase in wages and salaries, leading to a significant decrease in purchasing power every year.

Now, if we optimistically assume a 50% inflation rate for the year 1402, it can be said that employees, despite a natural increase of 20% in wages and benefits, will still lag behind inflation by at least 30%. This combination of factors sends a clear message to the Iranian economy, which is the unprecedented shrinking of the middle class and the widening of absolute poverty in the country.