page_title: Iranian subsidy reform plan
section_title: Price adjustments
hierarchical_section_title: Iranian subsidy reform plan / Implementation / Price adjustments
caption_attribution_description: English: Iran, Inflation, GDP deflator (annual&#160;%).
context_page_description: The Iranian targeted subsidy plan, also known as the subsidy reform plan, was passed by the Iranian Parliament on January 5, 2010. The government has described the subsidy plan as the "biggest surgery" to the nation's economy in half a century and "one of the most important undertakings in Iran's recent economic history". The goal of the subsidy reform plan is to replace subsidies on food and energy with targeted social assistance, in accordance with a Five Year Economic Development Plan and a move towards free market prices in a 5-year period. The subsidy reform plan is the most important part of a broader Iranian economic reform plan.
  According to the government, approximately $100 billion per year is spent on subsidizing energy prices and many consumable goods including bread, sugar, rice, cooking oil and medicine. However, some experts believe direct subsidies are about $30 billion, depending on oil prices.
  The subsidy system has been inherited from the Iran–Iraq War era but was never abolished. Iran is one of the largest gasoline consumers in the world, ranking second behind the United States in consumption per car.
context_section_description: The government took control of deciding how much the prices should rise in a year, as long as the subsidy cuts on gasoline and other refined products, natural gas, electricity, water, food (sugar, rice, cooking oil and bread), health and education are between $10 and 20 billion dollars annually. Estimates indicate that the government has to increase existing prices by an average of 2.5 times to achieve the lower target and by 4 times for the maximum target. According to the IMF, Iranians can expect the first price hike to lift energy product prices between four and 20 times previous levels, with prices surging even higher eventually.
caption: Between 2002 and 2006, the rate of inflation in Iran has been fluctuating between 12 and 16%[51]
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