Alborz Habibi
Last updated: 21 September, 2012

In Iran, soaring prices cause major concerns

“One bottle of a non-alcoholic beverage costs nearly 1000 tomans (0.4$) now,” said Pouya, 17, as he exited through a store in the city of Karaj. “I only paid 500 tomans months ago but the drink’s price climbed to 600 tomans after a while and now it has reached a record high.”

Pouya blamed the sanctions for the increasing cost of goods and soaring inflation, which is currently running at nearly 24% according to statistics from Iran’s central bank. The bank is in charge of gathering financial reports along with the Iranian statistical center, whose head has recently said the center’s reports concerning the country’s inflation rate will be sent to officials confidentially till the end of the Iranian calendar year.

Eager to decrease the impacts of western sanctions on her family’s life, Zahra, 34, sold her gold bracelets in an attempt to rent a tiny store and build up a small business.

In fear of the possible effects of western pressure over Tehran’s disputed nuclear program, she gave up her dream. “Even if the sanctions don’t affect our daily lives directly, their mental influence keeps bothering us,” she told Your Middle East.

“Any step toward a better life faces unforeseen setbacks here; we don’t really know what the future holds for us. You cannot survive, unless you remain venturesome and bold in the current situation.”

The price of gold has increased nearly 30% since she sold her bracelets, adding to her regrets about not pursuing the business idea.

With the Iranian rial’s value suffering further depreciation against foreign currency in recent weeks, the value of Zahra’s income from the sale has slid dramatically.

The major plunge of the Iranian rial has compelled the authorities to offer plans, such as the launch of a forex bourse, aiming to maintain a balance between the official and free market rates of foreign currencies. According to Iran’s central bank, a U.S. dollar goes for 12,260 rials, nearly half of the price of this foreign currency in the street market.

On Wednesday, Iran’s minister of economic affairs and finance Shamseddin Hosseini appeared before the parliament, facing tough questions by high-profile lawmakers. He said the central bank, rather than his office, shoulders the responsibility of laying the country’s exchange policies.

His response came after a question by a member of the parliament’s economic affairs commission, Elias Naderan, who beckoned to mismanagement as the cause of the currency crisis.

“It’s better not to blame the enemy and the sanctions for everything,” he said in quotes carried by the Iranian labour news agency, as he threatened the finance minister of interpellation and vote of no confidence. 

In his latest interview with the state-run TV, Iranian President Mahmoud Ahmadinejad said reports suggesting that the price of the dollar could reach 30,000 rials are part of a psychological war. The real price of foreign currency is much lower than the current rate, he said.

The U.S. and its European allies have imposed harsh sanctions on the Middle Eastern country over its nuclear drive. Iran insists its nuclear program is for peaceful purposes, and denies allegations that the Islamic state is seeking a nuclear weapon.

EU members have already banned oil imports from Iran and have reportedly drawn up new sanctions aimed at forcing the Islamic Republic to abandon its nuclear program. The United States ratcheted up sanctions this summer to punish banks, insurers and shippers that help Tehran sell oil.

Authorities vowed to counter the pressure, considering “resistive economy” a solution. The initiative, which was first proposed by the Supreme Leader Ayatollah Ali Khamenei, is intended to wean the country of its heavy dependence on oil revenue and boost the country’s industrial output.

“We no longer get shocked by seeing a rise in the price of consumer products every day”, said Reza, a twenty-nine year old engineer in Tehran, while holding his fists very tightly closed.

“But if we want to build a developed country, we have to resist the pressure imposed by the arrogant powers, as we have always done.”