The food basket of the poorest 10% of the population just became smaller last year (March 2018-19).
The overall Consumer Price Index measured for Iranian households in the seven months ending Oct. 22 increased by 12.5%. The rise in inflation rate registered for low-income households, those who fall within three deciles at the bottom of income distribution, was slower than the average rate. For example, it was 10.7% for the first income decile and 11.8% for the third decile.
According to a report by the Persian economic daily Donya-e-Eqtesad, the seven-month inflation rate calculated for households within three deciles at the bottom of income distribution did not exceed 3.9% in the Iranian years ending March 2017 and 2018. However, the index jumped more than 30% in the last Iranian year that ended March 2019.
Such a surge in consumer prices is doubly difficult for low-income families, given their restricted market basket. Consequently, they have been forced to remove even essential items from their basket of goods and services.
Data released by the Statistical Center of Iran show households in the first income decile (those with the lowest income) spent 2.43 million rials ($21.7) on meat last year compared with 2.11 million rials ($18.9) in the year ending March 2018, suggesting that they spent more to buy meat last year. However, they consumed less meat.
In the year ending March 2018, 2.11 million rials (8$18.7) could buy around 5.6 kilograms of red meat whereas last year one could buy only 4.3 kilograms of meat by spending 2.43 million rials ($21.54). Low-income households’ consumption of red meat has been reduced from 474 grams to 363 grams a month.
The average size of each Iranian household in the first income decile last year was 2.58 people, which means per capita consumption of meat last year for the poorest of the Iranians was 140 grams per month. Similarly, individuals in the first decile consumed 0.9 liter of milk per month last year whereas the average per capita monthly intake of milk in Iran is twice this amount.
Last year, 3.1% of Iranian households in average lived in homes with a floor area smaller than 40 square meters, while the percentage of the poorest strata living in the same area was 12.8%.
The floor area of homes of 24.2% or around one-quarter of households in the first decile was less than 50 meters. The portion is 8.6% for the fifth income decile.
Low-income households dramatically reduced spending on items such as shoes last year. Each household spent 265,000 rials ($2.3) on shoes last year, about 103,000 rials (92 cents) for each individual in the first income decile. This comes as average spending on shoes for each Iranian was 845,000 rials ($7.57) or eight times as much as the poorest member of the public last year.
The overall Consumer Price Index measured for Iranian households in the seven months leading to Oct. 22 increased by 12.5%. The rise in the seven-month inflation rate registered for low-income households in three deciles at the bottom of income distribution was slower than the average rate
In the year ending March 2018, first income decile households spent 345,000 rials ($3) on shoes, about 80,000 rials (71 cents) more despite the rise in prices in the following year.
Last year’s spending on leisure activities for the first decile was 263,000 rials ($2.3), about 60,000 rials (53 cents) more than in the previous year, while CPI of “leisure and culture” group increased by 43.7% last year compared with the year before.
Another indication of the massive pressure of expenditure on the poor last year is the level of spending on jewelry and accessories, which stood at minus 6.47 million rials ($58) for the first decile. This means people had to sell 6.47 million rials worth of their jewelry and accessories, and failed to replace them, to meet their expenses. The average spending on jewelry and accessories for Iranian households was -360,000 rials ($3.2) last year. Deficit spending on jewelry and accessories can be observed for households in the first to seventh deciles.
Health and treatment expenditure of the first decile hovered around 9.43 million rials ($84.5) last year compared with 8.26 million rials ($74) the year before, a 14% increase year-on-year. This is while last year, CPI of health and treatment group grew by 17.2% compared with the previous year.
Households' Income, Expenses in Fiscal 2018-19
Iranian households living in urban areas spent an average of 393,227,000 rials ($3,486) in the last Iranian year (March 2018-19), 19.3% more than in the preceding year, according to the Statistical Center of Iran.
'Food and tobacco' (94,505,000 rials or $837) accounted for 24% of total expenditures, whereas expenditure on 'non-food' category stood at 298,772,000 rials or $2,648, accounting for 76% of total spending.
Meat accounted for 21% (the biggest share) of the overall urban households’ expenditures in the 'food and tobacco' category. Housing and fuel costs had the lion’s share in non-food category with 45%.
Urban households declared they received an average income of 434,905,000 rials ($3,855) last year, which shows an 18.6% rise compared with the previous year. This should be held against the backdrop of a 26.9% inflation rate as reported by the Statistical Center of Iran.
Sources of generating income for urban households were “paid-employment jobs” (33.4%), “self-employment jobs in farming or nonfarm payroll employment” (17%) and “miscellaneous sources of income” (49.6%).
The percentage of urban households that owned cars improved from 50.6% in the fiscal 2017-18 to 53.2% in fiscal 2018-19.
The percentage of households using refrigerators and freezers increased from 63.2% to 68.5%, vacuum cleaners from 91% to 91.5%, washing machines from 86.3% to 86.6%, dishwashers from 7.3% to 8.4%, stoves from 98.9% to 99.2% and the percentage of urban households owning microwave and halogen ovens went up from 12.4% to 12.6% during the period under review.
Last year, 93.7% of urban households used natural gas for heating.
Meanwhile, the average expenditure of rural households last year stood at 214,472,000 rials ($1,901), which registers a 20% rise compared with the year before.
“Food and tobacco” costs constituted 37% or 80,246,000 rials ($711) and non-food costs amounted to 63% or 134,226,000 rials ($1,189) of the total rural families’ expenses.
Flour, noodle, grains and bread accounted for 24% (the biggest share) of the overall rural households’ expenditures in the “food and tobacco” category, whereas “housing and fuel” had the lion’s share in non-food category with 28%.
The average yearly income of rural households was 233,114,000 rials ($2,066) that show a 15.5% increase compared to the previous year.
Sources of generating income were paid-employment jobs (30.7%), self-employment jobs in farming or nonfarm payroll employment (31.9%) and miscellaneous sources of income (37.4%).
The percentage of rural households with cars improved from 29.6% in the fiscal 2017-18 to 32.3% in the fiscal 2018-19.
The percentage of households with refrigerators and freezers increased from 45.2% to 49.2%, stoves from 98% to 98.3%, vacuum cleaners from 64.6% to 66.1%, washing machines from 53.9% to 56%, dishwashers from 0.3% to 0.5% and the percentage of rural households owning microwave and halogen ovens went up from 1.9% to 2% during the period.
Last year, 67.8% of rural households used natural gas while 20.4% used kerosene for heating.
