The Inflation Puzzle; 35% Inflation Forecast for Food Products in the New Year

The claim by the Governor of the Central Bank regarding a reduction in inflation to 20% next year has faced significant backlash. Many experts and economic activists consider this prediction impossible and believe that inflation will be much higher next year. Economic actors in the food industry predict that inflation in this sector will be at least 35% next year. The newspaper Donya-e-Eqtesad has reported on the challenges of food supply in both production and distribution sectors. This report highlights factors such as drought, water scarcity, rising production costs, animal feed crisis, fuel supply issues, animal inputs, and medicine as contributors to inflation in this sector. The report also mentions government currency policies and fluctuations in currency prices in the market and their impact on rising production costs. All these factors have ultimately led to a reduction in production capacity in this area. A member of the Iranian Chamber of Commerce's board of representatives pointed out that food and consumer goods inflation exceeds 60% and stated that in the year 1403 (2024), we will witness an increase in food and beverage prices. Hassan Forouzanfar has predicted that food inflation could range from 35% to much higher figures. According to this economic activist, if oil revenue is sufficiently secured, inflation will be around 35%, but if this does not happen, there will be a corresponding budget deficit and inflation. These predictions come as Mohammad Reza Farzin, the Governor of the Central Bank, stated on Thursday, March 15, that the Central Bank aims to bring point-to-point inflation to the 20% range by the end of Esfand 1403 (March 2025). This claim by the Central Bank's governor has been criticized by several experts. Critics believe that there are no signs of improvement in any economic indicators, and the outlook for the Iranian economy is very bleak. Factors such as an imbalanced and ambiguous budget, rising taxes, a newly formed parliament, the government being in its last year of activity, restrictions on the import of raw materials for production, currency commitments, new dollar rationing, escalating regional tensions, and the U.S. elections have been cited as issues that have darkened the economic outlook for Iran in 1403. Sara Bazavandi noted that if workers' wages increase in line with inflation, employers will protest. The dollar rate has crossed 60,000 tomans; gold coins are nearing 38 million tomans. Retirees, workers, and protesting drivers have held at least four gatherings. The campaign for a minimum wage of 15 million tomans has garnered around 70,000 signatures. The heavy shadow of poverty looms over the Haft-Seen table; Nowruz 1403 (2024) will not smell of gifts. The market regulation for the New Year and Ramadan is in a coma; the inflation engine has been turned on. The rial is on the path to destruction; a newspaper reported a record outflow of capital. The competition between the poverty line and people's livelihoods; an economist stated that 70% of Iranians are either below the poverty line or at risk of falling into it.