Recent figures published by the Iranian Parliament Research Center reveal that over the next 12 months, between 23 and 40 percent of Iran's population will be living under the absolute poverty line.
The new report [Persian PDF] provides an accurate indication of the damage runaway inflation has inflicted on the Iranian people and the economy over the last couple of years.
The report shows that by the end of the Iranian calendar year 1397 (March 21, 2018-March 20, 2019) the inflation rate had reached 47 percent and the economy had a negative growth rate. According to the report, a year earlier, in 1396, the rate of absolute poverty only applied to 16 percent of the Iranian population. In 1397, however, this rate climbed to between 23 and 40 percent, and continues to rise.
The reports predicts that, with the decline in the real income of households, throughout the current year, 1398, Iranian people will find it even more difficult to pay for basic necessities and that increasing unemployment is bound to make things even worse. The end result, says the report, is an increase in the number of people who live below the absolute poverty line.
The Parliament Research Center estimates show that during the 12-month period between the last month of 1396 and the 11th month of 1397, the price index for consumers and producers rose by 53 and 47 percent respectively.
According to this study, in 1396 the poverty line for a household of four in Tehran was around 2.5 million tomans ($592) per month but by the end of the autumn of 1397 it had risen to around 3.4 million tomans ($805).
Source: The Iranian Parliament Research Center
As the above table shows, the price of the minimum basket of goods —necessary and everyday items — above the poverty line increased by almost 42 percent within only nine months in 1397, while the income of the poor has either fallen due to unemployment or, in the best case scenario, has stayed the same.
According to the study, even if one assumes that household incomes have increased by 20 percent, almost 24 percent of these incomes have fallen below the poverty line due to inflation.
The report identifies seven deciles in Iran's population that fell below the absolute poverty line in 1397 and recommends that they be helped financially to survive. The vulnerable groups include those who currently receive support from the Imam Khomeini Relief Foundation and the Iranian Welfare Organization, workers who have lost their jobs, retirees whose pensions places them below the absolute poverty line and government employees whose salaries are below the poverty line.
The study estimates that the Iranian people’s livelihood had deteriorated so dramatically that by the end of 1397, the first four deciles of the population must have fallen below the poverty line.
Subsidies Miss the Mark
The report’s authors state that in 1397 the distribution of subsidies had not been optimal and had missed the mark by a wide margin. According to the report, the per capita monthly subsidies had been around 73,000 tomans ($17.5) for the 10th decile of the population and around 18,000 tomans ($4.5) for the first decile. But if this subsidy had been distributed equally among people, each individual would have received around 38,000 tomans ($9) per month.
Source: The Iranian Parliament Research Center
Referring to the chart above, the authors argue that the policy of subsidizing the imports of basic goods has failed to deliver the intended result and, considering the steep rise in prices, the policy must be changed.
The Research Center recommends that in 1398, to help the new wave of Iranians who are now living under the poverty line, the government must provide them with “support packages.” These packages would allocate a budget of more than $8 billion and distribute the money to the seven top deciles four times a year in the form of cash cards that can be used exclusively to buy basic food items such as chicken, beef, veal, rice, vegetable oil and grains. The study predicts that if such a plan is carried out, by the end of 1398, each Iranian in the first seven deciles, or around 57 million people, will receive around 432,000 tomans ($103) per year. These 57 million are those that the Research Center believes will fall under the poverty line over the course of 1398 and who must be supported.
How Will Sanctions on Metal Affect the Iranian Economy?, May 10, 2019
A Bleak Future for Iran's Job Market, May 3, 2019
Can Iran Survive Record Inflation?, February 25, 2019
Iran’s Unemployment Crisis: Only 11 Million Full-time Jobs, January 23, 2019
Could a 20% Salary Increase Help State Employees?, December 5, 2018
Iran Rushing Toward 30 Percent Inflation, November 27, 2018
Iran’s Economy Is Stagnating Even Before New US Sanctions Hit, October 30, 2018
How did Countries Deal with Iran During Previous Sanctions?, August 7, 2018
Expert Warns “Iran’s Economy is in a Death Spiral,” April 26, 2018