Skip to main content

Why Rouhani should think beyond price controls to contain inflation

In Iran, the Rouhani administration’s tendency to turn to price controls to stave off inflation carries major long-term costs in exchange for only short-term benefits.
A man counts stacks of Iranian rials at a currency exchange shop in Kerbala , 110 km (70 miles) south of Baghdad January 23, 2013. Traders and owners of hotels in the holy city of Kerbala complain of sluggish business and a drop in Iranian pilgrims as a result of a sharp fall in the Iranian rial caused by a package of international sanctions imposed on the neighbouring country. REUTERS/Mushtaq Muhammed (IRAQ - Tags: SOCIETY BUSINESS) - GM1E91N1RPN01

Turbulent fluctuations in the value of the Iranian currency on the open market in 2018 led to the establishment of the Supreme Economic Coordination Council. Economic pundits at the time were of the opinion that this new body — bringing together the heads of the three branches of power — would prepare the ground for major and broad long-awaited economic reforms, as this entity was deemed to foster the convergence of uniform policymaking among the country's three branches of power to save the downbeat economy from tanking deeper. Nonetheless, it opted to grant more regulatory and supervisory authority to an old state agency called the Consumers and Producers Protection Organization (CPPO).

Historically, Iranian governments have been reluctant to fix the ailing domestic economic system. Instead, they have been more keen on adopting conventional impractical tools to curb liquidity growth, e.g., by intervening directly in the markets, albeit in the process ruining market economy efficiency.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 per year.