Food price hikes raise concerns in Iran

TEHRAN, Iran (AP) ? Iranians lined up to buy cooking oil and meat in Tehran on Monday, as price hikes threatened to stir discontent less than two months before presidential elections.

Prices of staples such as imported cooking oil, chicken and red meat have jumped up to 60 percent since authorities decided last week to increase the official dollar exchange rate for importers who need the currency to do business. They now pay 24,500 rials for $1, nearly double the previous rate of 12,260.

Iran's economy is flagging under international and Western sanctions over Tehran's disputed nuclear program. The West suspects the program could lead to production of weapons, but Iran denies the charge. The sanctions, which include an oil and banking embargo, have led to a shortage of foreign currency and drastically cut the government's income, while the country's persistent inflation eats into consumer buying power.

Despite government assurances that the new rate will go not go into effect for several weeks, many people are stocking up on goods before prices rise even more. The government has banned prices hikes until the new measures are in place and dispatched inspectors to keep tabs on businesses.

"Any price rise is illegal," said Mojtaba Farahani, an official in the Commerce Ministry. "So far a remarkable number of reports have been filed about wholesale and retail shops," he told the semiofficial ISNA news agency.

In Tehran, stores were crowded with people rushing to beat the hikes. In one grocery, homemaker Neda Rahimi quickly scooped up the last three bottles of cooking oil left on the shelves. "Everyday prices are going higher and higher. I will take these for now, so I have some extra at home," said the mother of two.

In another shop, 48-year-old high school teacher Asghar Niazi said a government announcement in March to raise public sector wages had encouraged stores to raise prices.

"Now every shop has hiked its prices up more than 20 percent. I was here to buy cooking oil, but people snapped it all up before I arrived."

Frustration over the price hikes has resonated in Iran's tightly controlled media, which has grown increasingly critical of the government over the past year for the surge in costs for milk, chicken, rice and locally made cars.

On Monday, a string of newspapers warned that the new currency rules could add to restlessness ahead of the June 14 election to select a successor to President Mahmoud Ahmadinejad.

The commentaries, which came from across the political spectrum, suggest disputes within the country's closed ruling system. Even the influential conservative daily Kayhan, which often supports the policies of Iran's ruling clerics, referred to "hidden hands" working from behind the scenes to provoke discontent.

The more moderate Hamshahri newspaper ran a front page article focusing on "expanding" prices, accusing officials of trying to "downplay" their effects. Another daily, Haft-e Sobh, reported traffic jams in front of major stores because of long lines of customers rushing to make last-minute purchases.

Prices for local products are also rising, although at a slower rate. While in Tehran a liter of imported cooking oil has jumped to around 100,000 rials from about 60,000, the domestically produced version now costs 34,000 rials, compared to 27,000 rials two weeks ago.

Price rises for locally produced products that have become the mainstay of much of the country are likely to generate more concern among policymakers, especially since even the prices of basics, like bread, are becoming less stable. Last week, Deputy Commerce Minister Abbas Ghobadi said prices of bread "will definitely go higher."

Source: http://news.yahoo.com/food-price-hikes-raise-concerns-iran-073100568--finance.html

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