Economist Warns of Economic Collapse: 60% Inflation Not Unthinkable

An economist has provided a bleak forecast for the inflation rate in the upcoming year, stating that inflation may reach 60% or more. Hossein Raghfar, a professor of economics at Alzahra University, told the Shargh newspaper that independent estimates for next year's inflation are higher than the government's estimate of 40%. Previously, economist Alinaghi Mashayekhi described the economic conditions in Iran in the Donya-e-Eqtesad newspaper on January 27, stating: 'Inflation is close to 40%, and unemployment is high; the purchasing power of the middle and lower classes has decreased and continues to decline.' Predictions of rising inflation rates for the next year come at a time when the purchasing power of tens of millions of Iranians has significantly decreased this year. Currently, the minimum monthly wage for workers covered by labor law, married with children, is about 8 million tomans, while workers not covered by labor law working in small workshops earn less than the approved wage. In this context, employers, citing what they call the high share of wages in production costs, oppose the wage increases demanded by workers. Raghfar stated that the share of wages in total expenses for businesses is low, around 10%. He identified the government's budget deficit financed by currency fluctuations as a calamity for production units, adding that the costs of this type of management are borne by employers and ordinary people, and since employers cannot influence the factors causing inflation, the existing pressure falls on workers and labor forces. This economics professor believes that the inequality of costs and the situation will worsen next year. The predictions of this economist and some other experts regarding the acceleration of inflation growth next year come at a time when the government seems to be aiming to guide minimum wage determination sessions towards a 20% increase, disregarding the consequences of inflation. Regarding the salary increases for workers and retirees, the government and parliament have agreed to a 20% increase, which has also been approved by the Guardian Council. The government's efforts to keep wage levels low come at a time when, at best, inflation will be around 45%. Some experts believe that the 20% wage increase next year will be neutralized by the inflation of the last days of the year, and from the beginning of the next Iranian year, a further weakening of people's purchasing power should be expected. The wages of workers are under the pressure of inflation; a member of the Supreme Labor Council stated that the cost of living basket exceeds '23 million and 500 thousand tomans.' The implications of inflation; workers without fixed wages are concerned about wage justice. Hidden implications of inflation; after installment meat and nuts, 'installment clothing' has reached the market for the New Year. Prices have risen again; a 2% increase in housing inflation in January. The Iranian economy is on the path to food rationing; increasing dependence on imports and a $3.7 billion shortfall in foreign reserves.