Runaway inflation has unnerved minds and made the poor poorer and the rich richer.

In fact, the administration’s well-intentioned but incompetently executed plan to introduce an economic policy to increase the purchasing power of the poor and the lower middle class has had the opposite result.
The Central Bank of Iran announced that inflation had hit 18.4 percent at the end of the last Iranian calendar year (March 2007-March 2008). In addition, the central bank recently said that during the Iranian calendar month of Farvardin (March 20-April 19) inflation was 24.2 percent higher than it was in the same month last year.
However, some economic experts dispute the figure and say inflation is even higher than the central bank’s estimates.
For example, house and rental prices have increased unbelievably, imposing an unbearable burden on people with limited means.
Now the administration and Majlis are accusing each other of being responsible for the rampant inflation. However, an unbiased examination of the matter shows that the administration and Majlis are both responsible for the current situation to varying degrees.
Shrugging off warnings by a few lawmakers that the approval of expansionary national budget bills would lead to high inflation, the majority of MPs voted in favor of the bills and consequent amendments to withdraw money from the Foreign Exchange Reserve Fund to compensate for budget deficits and to finance new projects.
Most legislators were unaware of the inflationary consequences of such bills and even boasted about the close cooperation between the Majlis and the administration.
But now, after nearly three years of trial and error, Majlis Speaker Gholam-Ali Haddad-Adel says, “We should be careful and acknowledge the absolute principles of economics in approving laws” on the national budget and for withdrawals of funds from the Foreign Exchange Reserve Fund and use the “results of the past two to three years as a guiding light for the future.”
However, now it has become clear to all that massive liquidity and constant rises in government expenditures are the driving forces behind inflation.
All this occurred because the billions of dollars that poured into Iran’s coffers due to the unprecedented oil prices of the past few years were converted into rials and injected into the economy.
To create more jobs, the banks started providing easy loans, but the money was channeled into speculative real estate and commercial activities rather than production activities, which drove prices up.
Now, after so much trial and error, every government body is making suggestions about how to control inflation.
Directing liquidity toward production activities, increasing privatization of state-run companies, decreasing government expenditures, and encouraging the central bank to adopt a deflationary monetary policy -– which it has recently put into practice -- are some of the proposals that have been made.
However, the result has been that the poor have become poorer and the rich richer. According to the latest reports, 35 percent of Iranians are living below the poverty line.
It has been estimated that 29.4 percent of Iranians were living below the poverty line in 2004, 31.9 percent in 2005, 33.6 percent in 2006, and 35 percent in 2007, which is an unacceptable increase in the number of families who have been added to the sea of poor people.