Tehran Shopkeepers Protest as Rial Plunge Reaches Record Low

The Iranian economy is facing challenging times, marked by a significant decline in the value of the rial. The currency recently plunged to a record low of 1,420,000 rials per dollar. This situation has led shopkeepers in Tehran to protest, reflecting wider discontent among citizens struggling with inflation.

Economic Context and Protests

Tehran shopkeepers are expressing their frustrations over the drastic depreciation of the rial. The drop in value has contributed to rising costs of living, affecting livelihoods across the nation. Lawmakers have raised concerns about the potential consequences of current economic policies.

Government Budget and Wage Proposals

The Iranian parliament is reviewing a draft budget that suggests a 20% increase in public-sector wages. This proposal aims to alleviate some of the burdens caused by inflation, which remains among the highest globally.

• Salaried workers earning up to 400 million rials (approximately $282) will be exempt from income tax.
• Workers earning between 400 million and 930 million rials ($282–$655) will face a 10% tax rate.

While the budget’s intention is to combat inflation, officials like Pezeshkian acknowledged that the wage increase does not fully address the inflationary pressure faced by workers.

Concerns from Lawmakers

Parliament Speaker Mohammad Bagher Ghalibaf emphasized the importance of a well-structured budget, highlighting its impact on the everyday lives of the citizens. He cautioned that the assumptions behind the proposed wage increases require significant refinement.

Additionally, lawmakers have pointed out the government’s apparent inability to control the currency depreciation effectively. MP Mohsen Zanganeh noted that inflation could force the exchange rate up by roughly 40% by the end of the next year.

Planned Economic Measures

The government is set to expand its targeted support measures, including a consumer voucher program. These efforts are part of a strategy to address household needs amidst price volatility. The current fiscal year saw approximately $6 billion spent on importing gasoline, while next year’s budget allocates about $8 billion for essential imports, largely tied to foreign exchange subsidies.

In an attempt to manage subsidy costs, Iran has introduced a tiered gasoline pricing system. This system aims to maintain subsidized rates while discouraging excessive use of subsidies by wealthier households.

Challenges Ahead

Iran’s struggle with chronic inflation, compounded by international sanctions, leaves limited options for economic reform. Officials argue that despite fiscal constraints, efforts to protect lower-income families through tax exemptions and direct aid are critical.

The current economic landscape demands urgent attention, as Tehran shopkeepers continue to protest and express their concerns about the future. With the rial’s depreciation and high inflation juxtaposed with government efforts to stabilize the situation, the road ahead remains uncertain.