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Understanding the Causes and Consequences of Soaring Bread Prices in Iran

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Iran has recently witnessed a significant surge in the price of bread, a food staple that is essential for its citizens. This increase has caused growing concern and unrest among the people, as they struggle to cope with the rising cost of living.

According to the IRGC-run Fars news agency on July 25, the price of bread in Mashhad, one of Iran’s major cities, has increased by 40%. Traditionally subsidized bread varieties like Barbary and Taftun, which were previously available at lower prices, have seen considerable price hikes, with some reaching up to 1,200 and 900 tomans, respectively. Additionally, the price of the popular Sangak bread has surged from 1,400 to 2,000 tomans. Even the half-subsidized Khorasani Barbary bread has become more expensive, going from 1,300 to 1,800 tomans.

One of the main reasons behind the increase in bread prices is the government’s decision to raise the guaranteed purchase price of wheat from farmers. Initially, the government of Ebrahim Raisi claimed to support farmers and thereby fixing the price rate at 18,000 tomans per kilogram while the same commodity was available in the market at 9,000 per kilo.

With these exorbitant price differences, the government secretly monopolized the purchase of domestically produced wheat while exporting wheat abroad to earn cash dollars. Simultaneously, by bartering crude oil to other countries, it stimulated the trade of oil over wheat from abroad. Obviously, this wheat no longer reaches private silos, bakeries, and ultimately, the consumers, at its previous price. This is the most significant reason behind the high bread prices, which are often overlooked.

The removal of government-provided foreign currency for wheat imports has further compounded the issue. Wheat importers are now forced to buy foreign wheat at market exchange rates, leading to higher overall costs. This has had a direct impact on bread prices, making it difficult for many Iranians to afford their daily bread.

The third reason behind the rising bread prices is the high demand for bread in the domestic market. It becomes apparent that when people face difficulties affording other food items, they resort to consuming more bread to satisfy their hunger. This surge in bread consumption creates an imbalance between supply and demand, ultimately driving the prices even higher.

The fourth reason behind the rising bread prices is the government’s decision to increase the price of rationed (coupon-based) bread. Under this approach, some local bakers can produce the Iranian “Fantasy bread” using flour priced at 380 tomans per kilo and sell it at market prices. Consequently, the prices of “Fantasy bread” have also tripled due to the use of market-priced flour by local and industrial bakers.

In hindsight, the surge in bread prices has always been a challenging issue as it has triggered widespread protests and social unrest in Iran’s history. The Bread Riot, also called the Bread Uprising, refers to the uprising and protests of the people of Tehran following a deadly famine that reached its peak on December 8, 1942. The people’s frustrations and grievances over the rising cost of living reached a boiling point, with outraged masses storming the Parliament and physically assaulting several representatives. Others attacked the residence of then-Prime Minister Qavam os-Saltaneh, looting and destroying it.

Solving economic challenges and prioritizing the nation’s well-being seems to be insignificant considerations for the clerical regime in Iran. Instead of focusing on building the country, the regime has spent four decades diverting valuable resources to support terrorist networks abroad and strengthening a domestic security apparatus.

Furthermore, the regime’s officials have displayed a lack of genuine interest in addressing the demands of the people. They fear that acceding to popular demands will only embolden the populace, leading to more demands and eventually encroaching on their authoritarian rule and suppressing civil liberties. Consequently, the regime has chosen to allocate resources toward self-enrichment, accumulating vast wealth in foreign bank accounts while neglecting the welfare of its citizens.

As a result of the regime’s mismanagement, the ranks of the impoverished have continued to swell, while its loyal forces have become increasingly scarce, straining its resources. The glaring imbalance between the regime’s priorities and the needs of its people will inevitably shift the balance of power on the ground. It is not a matter of if but when this transformation will occur.