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Iran’s Household Economics

The Iranian government looks to control inflation, which is now surpassing 39%.
EDITORS' NOTE: Reuters and other foreign media are subject to Iranian restrictions on their ability to film or take pictures in Tehran.
An Iranian employee checks the food shelves at a shopping mall in northwestern Tehran February 3, 2012. With just a month to go before a parliamentary election, Iran has been hit hard in recent months by new U.S. and European economic sanctions over its nuclear programme, which Tehran says is peaceful but the West says is aimed at making a bomb. Picture taken February 3, 2

On Sept. 10, Iranian President Hassan Rouhani admitted on live TV that inflation has surpassed 39% and that Iran's economic conditions are undesirable for Iranian society. Inflationary pressures in the absence of appropriate income adjustments produce undesired consequences for household economics. This short analysis will try to assess the impact of inflation on household economics and the short- and medium-term consequences for Iranian society.

Former President Mahmoud Ahmadinejad had instructed key institutions not to publish statistics on household expenditures in the aftermath of subsidy reforms. Now that a new government is in place, the Central Bank of Iran (CBI) has finally published a report outlining household expenses in the Iranian year 1390 (March 2011 to March 2012). This was the first full Iranian year in which the initial phase of the country’s subsidy reforms had taken shape, i.e. blanket subsidies on food and fuels had been partially removed and direct cash hand-outs were paid to about 80% of the Iranian society. The then-government’s claim was that cash hand-outs were sufficient to compensate for the inflationary impacts caused by price adjustments. This claim can now be tested through official statistics.

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