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Iran Allows Limited Price Increase For Home Appliances Amid Devaluation

Home Appliances shop in Tehran. File Photo.
Home Appliances shop in Tehran. File Photo.

An Iranian regulatory body on Tuesday issued a permit allowing price hikes of up to 25 percent for domestically produced home appliances in a bid to control runaway prices.

Fast devaluation of the national currency and higher costs of production have led to soaring prices in every sector. The devaluation is mainly due to U.S. sanctions that have drastically cut Iran's foreign currency revenues.

Iran's already weak rial has dropped more than 20 percent in the last four months partly due to the COVID pandemic and partly because of dwindling foreign currency reserves.

Prices of many domestic products deemed as essential are highly regulated by the government in Iran. Food staples, cars and motorcycles as well as home appliances are subject to price regulation. The government also often halts or puts a cap on imports to support local producers and manufacturers.

In recent months the prices of some home appliances have gone up by as much as 50 percent but the market regulatory body says it will only allow a 20 percent increase in the price of television sets and 25 percent for other appliances in comparison with February prices. Iran's Consumers and Manufacturers Protection Organization can take punitive measures against those selling products at higher prices.

According to the Statistics Center of Iran the cost of production went up by around 42 percent in the previous Iranian calendar year (March 21, 2019 to March 20, 2020).

On Friday President Hassan Rouhani ordered related organizations to take immediate measures to supervise and regulate the prices of home appliances and increase production to prevent prices from soaring and becoming unaffordable.

Hamshahri newspaper on Friday reported that home appliances manufacturers have several times stopped production since March and resumed their sales with an increase of between 5 to 10 percent each time.

Manufacturers say the devaluation of the rial against major foreign currencies has made production highly unprofitable. According to the spokesperson of the Home Appliances Manufacturers Union, importing raw materials has become very costly due to the higher forex rates. The price of a sheet of steel has nearly tripled in a fortnight, he said.

Ministry of Industries figures show a significant drop in the production of some home appliances such as television sets and washing machines since 2018 when the United States re-introduced sanctions against Iran.