According to media reports in Iran, bread prices are set to increase by up to 25% in more than 10 provinces.
Government subsidies to control bread prices are one of the measures the Iranian regime takes, but in recent years, financial shortages have led to an increase in bread prices.
According to the newspaper Etemad, in traditional bakeries, 80% of the final bread price is covered by government subsidies, and people pay 20% of the actual price. Thus, the real price of bread is 4 to 5 times the current price, and given the poverty line in Iran, a significant portion of the population below this line would face additional pressure if such subsidies were removed. Bread is highly consumed in Iran and is one of the main food items.
Therefore, wheat is always considered a strategic commodity that directly affects bread and its price. The government in Iran buys wheat from farmers at a guaranteed price and sells it at a subsidized rate for bakery use. However, this year, as in recent years, the government has faced issues in timely payment for the wheat purchased from farmers, leading to protests.
A few days ago, the Court of Audit reported deviations in financing targeted subsidies and borrowing from Treasury and Central Bank resources, stating that the regime’s Ministry of Economic Affairs and Finance paid 420 trillion rials (approximately $685.714 million) for payments to wheat farmers from trust funds, and the Central Bank also paid 315 trillion rials (approximately $514.285 million) for farmers’ claims “without observing legal regulations.” Meanwhile, Mohammad Jalal, an advisor to the Minister of Economy, also reported increased bakery costs and said bread prices must rise.
In this context, the Deputy for Economic Coordination of South Khorasan Province also announced a 25% increase in bread prices. This decision has been made while the claims of the province’s wheat farmers remain unpaid, and farmers face financial problems.
The increase in bread prices in 10 provinces occurs while the Parliamentary Research Center previously deemed the bread subsidy amount for 2024 insufficient.
According to Etemad, the government estimated the bread subsidy in the 2024 budget bill at 1.43 quadrillion rials, (approximately $2.334,693 billion) a 150% increase from 2023. The Parliamentary Research Center estimated the required credit for bread subsidies in the 2024 budget bill to be about 1.92 quadrillion rials (approximately $3.134,693 billion) in the first scenario and 1.78 quadrillion rials (approximately $2.906,122 billion) in the second scenario.
The state-run Etemad newspaper stated that the difference between the two estimated scenarios is only “in the guaranteed purchase price of wheat,” with all other factors being equal. Thus, in the “most optimistic scenario,” the bread subsidy for this year will have a deficit of about 280 trillion rials (approximately $457.142 million), and in the “most pessimistic scenario,” a deficit of 420 trillion rials (approximately $685.714 million), making a bread price increase inevitable.
The issue of bread and the subsidies paid for it is a sensitive topic in Iran, as budget deviations to provide bread subsidies have occurred under various administrations.
