Central Bank: The 4200 Toman Dollar Could Not Prevent the Increase in Basic Commodity Prices

Abdolnaser Hemmati, the Governor of the Central Bank of Iran, acknowledged in an Instagram post that "the allocation of preferential currency to basic goods has not been able to prevent their price increases in the medium term due to the nature of the market and the weaknesses in the distribution and oversight systems." In the same post, he emphasized that "gradually, in most cases, the subsidy has distanced itself from the consumer and has benefited intermediaries." As Hemmati explained in his Instagram post, the Iranian government and Central Bank are simultaneously analyzing the allocation of the 4200 Toman currency for basic goods and will "make an appropriate decision in this regard." Hemmati also identified "the most important discussion for the government and Central Bank as ensuring the supply of basic goods and necessary medicines for the people." He noted that "the intensification of sanctions has the most negative impact on low-income and vulnerable segments of society, so it is natural that the most important discussions of the government and Central Bank focus on how to supply basic goods and necessary medicines for the people." Hemmati stated, "Obstacles and problems in the distribution system have caused that despite the initial impact of the 4200 Toman currency on controlling the supply shock, its disadvantages have gradually become apparent and, with the increase in their prices in the market, have created rent and increased the general price level." In the 2019 national budget bill, about 14 billion dollars was allocated for the import of basic goods at the government rate of 4200 Toman per dollar to ensure that, as government officials including President Hassan Rouhani have repeatedly emphasized, the prices of basic goods needed by the people do not increase. Additionally, members of parliament have agreed to the government's plans for distributing basic goods among the people through other means, including the use of coupon cards or electronic coupons. In recent months, the prices of all consumer goods, including basic goods, have increased. According to a report from the Statistical Center of Iran on inflation rate changes in Bahman this year, the price index of the "food, beverages, and tobacco" group experienced a 64.3% increase compared to the same month last year.