Act of subsidies targeting was run to increase the efficiency and allocate the resource in Iran economy from Azar 1389. In this act increasing energy and wheat prices were emphasized by economy policy makers. To prevent the loss welfare effects of price increase, the government attempted to cash payments to households. In this paper, the main purpose is to measure true cost of living index and compensatory variation through Almost Ideal Demand System (AIDS) for urban households in 1390. The results indicate that the most welfare surplus gained of paying cash subsidies was the first group (first decile) and each person of this group should spend 189603 Rials to reach level of utility in 1389. Therefore according to government pay cash subsidy, per person of first group has 265397 Rials surplus income. The lowest welfare surplus gained on average deciles (8-9), so these families are faced with 39593 Rials reduced welfare.