“Communications”, one of 12 groups of goods and services surveyed by the Statistical Center of Iran for calculating the inflation rate, registered an average annualized inflation rate of 8.8% in the 10th month of the current Iranian year (Dec. 22, 2022-Jan. 20) — the lowest among the groups under review.
The month-on-month and year-on-year inflation rates of the group reached 2.7% and 8.8% respectively. The YOY inflation of the group was also the lowest among all the 12 categories surveyed.
The 12 groups of the basket of consumer goods and services surveyed by SCI include "food and beverages" with a coefficient of 26.64%, "tobacco" with 0.59%, "clothing and shoes" with 4.78%, “housing and utilities" with 35.5% (highest), "furniture, home appliances and their maintenance" with 3.93%, "health and treatment" with 7.14%, "transportation" with 9.41%, "communications" with 2.87%, "leisure and culture" with 1.65%, "education" with 1.86%, "hotels and restaurants" with 1.44% and "miscellaneous items and services" with 4.18%.
The overall annualized inflation reported by the SCI on a monthly basis has reached a new high.
The general annualized inflation stood at 46.3% in the 10th month of the year.
Only in the fiscal 1995-96 and 1996-97 did Iran experience inflation rates above the current level.
Notably, this is the eighth consecutive month the annualized inflation is rising after the government put into effect what it touted as “economic surgery” by abolishing the heavily subsidized import of essential goods.
The general goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) stood at 587.4 in the month under review, indicating a month-on-month rise of 4.3% and a year-on-year rise of 51.3%.
CPI hit 578.5 for urban households and 637.1 for rural households, indicating a month-on-month increase of 4.3 and 4.3%, respectively.
SCI put the annualized inflation for urban and rural areas at 45.5% and 50%, respectively.
The year-on-year inflation stood at 50.6% for urban areas and 54.9% for rural areas in the month.
The rise in prices of goods and services accelerated at an unprecedented pace after the government decided to overhaul the import subsidy system.
The government move saw the abolition of the controversial practice of allocating cheap dollars at the rate of 42,000 rials per dollar, locally known as the Preferential Foreign Currency, to import essential goods, including corn, soymeal, unprocessed oil, oilseeds and barley, in addition to wheat, flour and medicine.
The market value of the dollar is currently above 440,000 rials.
“Until now, we have been paying to producers [read importers] but now the subsidies go to consumers. In fact, the Preferential Foreign Currency has not been ceased, rather the allocation method has changed,” President Ebrahim Raisi said in a televised speech on the eve of the introduction of the move in May.
In his speech, Raisi emphasized that the removal of cheap dollar allocation will not lead to a price rise in wheat, flour and medicine. However, the move has led to a dramatic rise in the prices of essential goods. In fact, the prices of all commodities and services have also risen suddenly in a ripple effect.
Also known as necessity or basic goods, essential goods are products consumers will buy, regardless of changes in income levels.
