Iran has abruptly increased prices as much as 300 per cent for many foods made with flour. Photo: AP
Iran has abruptly increased prices as much as 300 per cent for many foods made with flour. Photo: AP
Iran has abruptly increased prices as much as 300 per cent for many foods made with flour. Photo: AP
Iran has abruptly increased prices as much as 300 per cent for many foods made with flour. Photo: AP

Iran protests break out over soaring bread prices


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Soaring bread prices have led to protests in Iran, with shops being set on fire and the security forces arresting "provocateurs", the official Irna news agency has said.

It follows a cut in government subsidies for imported wheat that caused price rises as high as 300 per cent for many foods made with flour.

The Iranian government plans to offer digital coupons in the next couple of months for limited amounts of bread at subsidised prices, Reuters reported. The rest will be offered at market rates, with other food items added later.

Almost half of Iran’s 82 million population are now living below the poverty line. Inflation is about 40 per cent — with some estimating it at more than 50 per cent.

There were scattered protests in a number of cities, according to Irna, in which crowds chanted slogans against the price rises and some shops were set on fire. Twenty-two people arrested.

"Despite attempts by provocateurs to incite protesters, the rallies ended with the intervention of security forces,” Irna reported. It said calm had been restored.

The largest protest was in Dezful, a city in the oil-rich south-western province of Khuzestan. Irna said an estimated 300 people were dispersed by the security forces. It said 15 people were arrested for "trying to create chaos" in the city.

About 200 people demonstrated in Shahr-e Kord, the capital of Chaharmahal and Bakhtiari province in western Iran on Thursday, Irna said.

“The rally ended at the request of law enforcement agents to prevent thugs from exploiting the situation,” it said.

In the first signs of discontent over price rises, Iranian media last week reported disrupted internet services, an apparent attempt to stop the use of social media to organise rallies and disseminate videos.

Although Friday's Irna report was the first acknowledgement of the protests by Iran’s official media, videos uploaded by social media users this week have showed protests in Dezful and other cities, in which people chanted slogans against price rises and the country’s leaders.

Reuters could not independently authenticate the videos.

Wheat prices have drastically increased globally since the start of the Russian invasion of Ukraine in February, adding to the cost of subsidies in Iran.

Iranian officials have also blamed the price rises on the smuggling of subsidised bread into neighbouring Iraq and Afghanistan.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Schedule:

Pakistan v Sri Lanka:
28 Sep-2 Oct, 1st Test, Abu Dhabi
6-10 Oct, 2nd Test (day-night), Dubai
13 Oct, 1st ODI, Dubai
16 Oct, 2nd ODI, Abu Dhabi
18 Oct, 3rd ODI, Abu Dhabi
20 Oct, 4th ODI, Sharjah
23 Oct, 5th ODI, Sharjah
26 Oct, 1st T20I, Abu Dhabi
27 Oct, 2nd T20I, Abu Dhabi
29 Oct, 3rd T20I, Lahore

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Updated: June 17, 2023, 1:46 PM