An Unprecedented Rise in Iran’s Misery Index

The latest data from Iran's Statistical Centre shows that in 2020, the misery index in the country reached 46%, the highest rate in the last decade. The current upward trends in inflation and unemployment rates predict that Iran's misery index could even go higher by the end of 2021.

The misery index is the sum of a country’s unemployment rate and annual inflation rate. It serves as an indicator of the country’s economic condition and the degree of hardships that the general population experiences.

The 2020 Iran misery index fluctuated up to 14.3 percent across the country. The Markazi province had the lowest reported misery index in the country, at 40.7%. The province of Kermanshah had the highest level, at 55%. (Link to the Map)

In a country that has such an elevated misery index, provincial unemployment and inflation rates fluctuate, alternating above and below the national level.

According to the Statistics Center of Iran, in 2020, the national unemployment rate was 9.6%. Though the national unemployment rate is still a single-digit number, this is not due to job creation, but rather, it is driven by a low economic participation and an exit of prospective workers from the country’s job market.

Unemployment rate fluctuates between provinces, from 15.2% in the Lorestan province to 6.2% in the Razavi & South Khorasan provinces. This 9% difference can be attributed to the differences in capital investments, infrastructure, employment rates, variations in demographic composition and climate disparities, amongst other factors. (Link to the Map)

There are noticeable commonalities between provinces that have similar misery indices and unemployment rates.

Another indicator of the misery index is the country’s inflation rate. The national inflation rate in the year 2020 was 36.4%; the highest rate since 2010.

The gap between the highest inflation rate, in the Kermanshah province, at 40.1%, and the minimum rate, in the Mazandaran and Markazi provinces at 33.3% is a noteworthy 6.8% difference. (Link to the Map)

Factors contributing to provincial inflation rates include: proximity to the hubs of goods and services, high cost of transportation and communication and lack of access to basic necessities.

However, the most important factors that contribute to high inflation rates are rooted in the country’s core economic conditions. These include the government’s budgetary imbalance, high budget deficits, and the methods used to mitigate these issues, all of which negatively affect liquidity and ultimately lead to a rise in inflation rates. The economic situation in 2020 was only worsened by the coronavirus and sanctions.

This article was originally published in Persian (available here).