Inflation Surge in Iran’s Harsh Economic Winter
According to Iran Gate, the inflation surge in Iran’s harsh economic winter is reported by the Iranian Statistics Center, which has published a report on the annual inflation rate for January 2023, indicating that the decline in the value of the rial has continued and even accelerated.
The Iranian Statistics Center has reported an annual inflation increase of more than 13 percent in the first month of winter, which means a significant decrease in people’s purchasing power.
According to the information published by the Iranian Statistics Center, the inflation rate for January 2023 has exceeded 463 percent. This event occurs despite the thirteenth government consistently claiming to control inflation and presenting it as its main achievement to the public.
Government Breaks Record in Reducing People’s Livelihood
Based on the report from the Iranian Statistics Center, the annual inflation rate for January 2023 for Iranian households has increased by more than 13 percentage points compared to December 2022. The point-to-point inflation rate also saw a significant increase in January 2023 compared to the previous month, reaching the range of 513 percent.
In other words, Iranian households are paying more than 513 percent extra for purchasing and obtaining an identical basket of goods and services compared to the same period last year.
Comparing these statistics with the inflation rate in December also indicates an increase of more than 28 percentage points in the point-to-point inflation rate last month. In other words, Iranian citizens have, on average, borne about 3 percent more costs compared to December 2022.
What is the Cause of Inflation?
Economists believe that the issue exacerbating and accelerating the inflation increase is the release of part of the public’s expectations following the surges in the exchange rate in the free market. The report from the Iranian Statistics Center is released while each US dollar is traded at over 45,000 tomans in the Tehran market, and experts expect this figure to reach the threshold of 50,000 tomans by the end of the year.
This price surge, which has caused numerous price tensions in the market, naturally leads to an increase in household basket costs. This fact, which is obvious, has been consistently denied by government officials and the central bank in recent weeks.
Even in various statements, officials from the thirteenth government considered the free market rate to be unrealistic, but economists have constantly warned about the impacts of market expectation releases on Iran’s economy.
Inflation Outlook in 2023
Now it seems that the release of these expectations has occurred, and the inflation rate is evidence of this claim. Experts believe the government will not be able to control the market fundamentally by adopting currency rate suppression policies.
Moreover, it lacks sufficient resources to further compress the price spring. Therefore, it is expected that the inflation rate will increase at a faster pace than ever, and the purchasing power of the people will fall more severely.
With this in mind and according to economists’ analysis, it seems the annual inflation rate will exceed 50 percent by the end of this year, and the point-to-point inflation rate will probably fluctuate in the range of 55 to 60 percent. If this happens, it can be said that the year 2024 will be an even more challenging year for Iranian households and their livelihoods.