In an attempt to harness soaring prices, Iran’s President Hassan Rouhani has ordered his cabinet ministers to open warehouses and “put stockpiled commodities at the people’s disposal.”
Announcing this at the end of a cabinet meeting on June 13, Rouhani’s chief of staff Mahmoud Vaezi told reporters that the recent price hike in Iran has “psychological reasons.”
The move to open warehouses was announced only two days after Iranian media reported that prices of several commodities and the exchange rate for the U.S. dollar reached record highs on June 11, and some social media users complained about a new hike in housing costs in Tehran.
Vaezi said that the measure would hasten the flow of goods from warehouses to shops.
He also admitted that “rising prices” were the most significant topic discussed at Tuesday’s cabinet meeting.
Vaezi added that part of the problem was that even importers using government allocated cheaper foreign currencies (42,000 rials per US dollar) sell their imported goods at a much higher price at the market.
On Monday June 11, each dollar was traded for 69,000 rials on Tehran’s unofficial exchange market, while the day before buyers could purchase a dollar against 67,300 rials, traders reported on the messaging service Telegram. There was another significant fall in the value of rial on Wednesday with each dollar traded for 75000 rials and one Euro for 84000 rials.
There has been a marked rise in prices in recent weeks. For instances, the price of various models of cars has risen between 20 million and 400 million rials in less than two weeks, reports say.
Iranian media have reported in recent days that Iranian markets have been experiencing massive turbulence and fluctuations following the United States withdrawal from the nuclear deal with Iran, also called the Joint Comprehensive Plan of Action (JCPOA).
Price rises have been also reported in gold, home appliances, housing and foodstuff, among others.
The Iranian government attempted to force the rate of 42,000 rials per U.S. dollar after the exchange rate surpassed 60,000 rials on April 10. Nevertheless, the price of the dollar and other foreign currencies have been rising on the unofficial or black market since April.
Mohammad Agha Taher, chairman of Iranian Grocers’ Union told the Iranian Students News Agency ISNA that the price of foodstuff has been on the rise during the past month although there are no shortages in the market.
ISNA reported in a late May dispatch that the price of meat has increased by over 16%, Basmati rice by over 21% and cooking oil by 4.5% since March.
Critics have repeatedly lashed out at the Rouhani administration for its inefficient and often “wrong economic policies.”
The critics dismiss Rouhani’s claim of reducing Iran’s inflation rate to a single digit, maintaining that he presents inaccurate statistics. The administration claims that the inflation rate is about 8% which is even less than the past month by a fraction of one percent.
Central bank governor Valiollah Seyf also attributed rising prices to psychological factors, expressing hope that “the situation would be improved soon.”
Following the US pullout from the JCPOA, Iran’s European partners in the nuclear deal have expressed their commitment to the deal with Iran, but stressed that they cannot force private companies to continue business with Iran if they fear the impact of US sanctions.
Several major companies such as Maersk, Total, Peugeot, General Electric, Boeing, Reliance and Siemens have left Iran to evade US sanctions which economic journalists in Iran believe to be hitting Iranians even harder in about five months from now.