Economics professor at Shahid Beheshti University, Albert Boghzian, has spoken of the emergence of “poor billionaires” in Iran.
In an interview with ILNA, the economist referred to the spread of poverty in the country as well as a report by the Majlis Research Center saying that 89% of Iranian workers and retirees are considered poor.
“When we talk about poverty, we use the economic index as a benchmark. For example, people with lower incomes than that benchmark are considered poor,” he added.
According to Majlis Research Center, a gradual increase in the poverty threshold was registered up to the year ending March 2018. However, the decline in per capita income, the depreciation of the national currency in the fiscal 2018-19 and the rise in the overall price levels have led to sudden surge in the poverty breadline.
The inflation rate stood at 31.2% in the fiscal 2018-19 and 41.1% in the fiscal 2019-20. The International Monetary Fund has projected a 34.2% rise in consumer price for the current Iranian year (March 2020-21).
The parliamentary think tank report also found that per capita income or average income of the Iranian people saw a 34% decline between the fiscal 2011-12 and fiscal 2019-20. Despite the nominal increase in Iranian people’s income, their purchasing power has been eroded by one-third over the eight years, the Persian-language daily Etemad reported.
“Poor billionaires are those who have expensive assets due to rising inflation – a house worth billions of tomans [1 billion tomans or 10 billion rials is worth around $40,000], a car, etc., but cannot afford to repair the engine of his side-by-side refrigerator-freezer. We are facing such a phenomenon in Iran today,” the economics professor said.
Referring to the elimination of the middle-class as a result of the implementation of wrong economic policies, Boghzian noted that the middle class has collapsed and the rich have become richer due to runaway inflation.
Inflation Gap
The average annual inflation gap among income deciles stood at 6.2% in the fourth Iranian month (June 22-July 22), indicating a 0.6 percentage point decrease compared with the previous month (6.8%), latest data released by the Statistical Center of Iran show.
The average goods and services Consumer Price Index in the 12-month period ending July 22 increased by 44.5% for the first decile (those with the lowest income) while it grew 49.9% for the 10th decile (those with the highest income).
Average annual inflation rates grew by 44.9% for the second decile compared with last year’s corresponding period; 44.5% for the third decile; 44% for the fourth; 43.8% for the fifth; 43.6% for the sixth; 44.4% for the seventh; 44.6% for the eighth and 46.3% for the ninth decile.
The highest overall CPI (using the Iranian year to March 2017 as the base year) stood at 349.8 for the 10th decile and the lowest calculated was 324 for the first decile. The first and eighth deciles registered a 3.4% month-on-month inflation; the second to seventh deciles saw a monthly inflation of 3.3%; the ninth decile 3.5% and the 10th decile posted a 3.9% month-on-month inflation rate.
The year-on-year inflation rates increased by 46.1% for the first and second deciles during the month under review, 45.3% for third, 44.6% for fourth, 44.1% for fifth, 43.5% for sixth, 43.3% for seventh, 42.8% for eighth, 42.9% for ninth and 43.9% for the 10th decile.
“This growth of poor billionaires cannot be seen either in the United States or in Venezuela, where we say there is hyperinflation,” Boghzian said.
According to IMF, Iran’s per capita income, which is calculated by dividing the country's total income by its total population stood at $5,200 in 2017 and the country ranked 91st in the world.
