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Price hikes in Iran not related to inflation - expert

Business Materials 16 May 2022 16:37 (UTC +04:00)
Price hikes in Iran not related to inflation - expert

TEHRAN, Iran, May 16. Iran's rising prices are not related to inflation, an economics professor at Allameh Tabataba'i University and former Deputy Minister of Labour and Social Welfare, Ali Sarzaeem, told Trend.

"Increasing the price of essential commodities does not mean rising inflation, and people are unaware of main inflatable measures," he said.

Sarzaeem pointed out that the budget deficit caused by rising minimum wages for workers and pressures on banks to offer interest-free advances are the main causes of the high inflation rate, so the government's subsides policy for one commodity is not inflation.

Professor went on to say that Iran has been challenged by inflation for four decades that is not related to subsidy. Instead of paying subsidies with a fixed figure, the value of subsidies should change based on the increase or decrease of foreign exchange prices.

According to the expert, if Iran reaches an agreement with the Western countries over the Joint Comprehensive Plan of Action (JCPOA), the foreign exchange rate will decline to 230,000 rials per USD, but any further fall would damage the economy.

Following the increase in wheat prices, the Iranian government plans to offer citizens digital coupons that will allow them to access a limited amount of bread at subsidized prices, while the rest will be available at market rates. The subsidy plan will later include other essential goods such as chicken, cheese, and vegetable oil.

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