Iran’s accelerating food inflation has severely weakened household purchasing power, with the cost of a basic food basket consuming as much as 86% of minimum income, even after accounting for government-issued food vouchers, according to recent estimates by Donya-e-Eqtesad.
Data for Dey (January) indicate that food and beverage prices surged by nearly 90% year-on-year, while monthly inflation in this category jumped to around 14%, sharply up from 5.6% in Azar (December).
This spike coincided with the government’s decision in the third week of Dey (mid-January) to abolish the preferential exchange rate of 28,500 tomans per dollar for most essential goods, with the exception of wheat and medicines.
Following this policy shift, the cost of providing a basic food basket for a four-member household rose to approximately 14.26 million tomans ($89.7) in Dey. In contrast, the legally mandated minimum monthly income for a worker with two children currently stands at about 12.5 million tomans ($78.6), including child and marriage allowances. This gap highlights that minimum wages, on their own, are no longer sufficient to cover even basic food requirements.
To cushion the impact of subsidy removal, the government simultaneously rolled out a food voucher scheme, allocating one million tomans ($6.3) per person per month for the purchase of essential goods. For a four-member household, the vouchers amount to four million tomans ($25.2). When this support is added to minimum income, food expenses still absorb about 86% of total available resources. Notably, this ratio exceeds last year’s level, when food costs accounted for roughly 78% of minimum wages.
Official data from the Statistical Center of Iran reinforce the severity of the trend. Point-to-point inflation for food and beverages reached 89.9% in Dey (January), while monthly inflation stood at 13.8%. This means households had to spend nearly 14% more than in Azar (December) and almost twice as much as a year earlier to meet basic nutritional needs.
Economists warn that food inflation tends to spill over into other sectors, pushing up overall prices without proportional compensation mechanisms.
Experience from the removal of the 4,200-toman preferential rate in 2022 suggests that inflationary pressures triggered by the latest adjustment could persist for two to three months, a view also shared by the economy minister, who has stated that the effects should subside by the third month.
Looking ahead, officials say minimum wages next year are expected to rise by more than 40%, which could provide temporary relief.
However, analysts caution that if food prices continue to outpace wage growth, higher salaries and cash-equivalent vouchers may still fall short of protecting household food security. In the long run, they argue, only sustained inflation control can restore purchasing power and stabilize living standards.
