An increase of 52.9% was registered in the Producer Price Index in the Iranian month of Dey (Dec. 22, 2018-Jan. 20) compared with the similar month of last year, the Central Bank of Iran's latest report shows.
PPI (using Iranian year to March 2017 as the base year for the first time) stood at 175.2 in Dey, indicating a 0.7% increase compared with the previous month.
The average PPI in the 12 months ending Jan. 20 grew by 34.2% compared with last year’s corresponding period. CBI put the preceding month’s annual PPI inflation at 30.6%.
PPI Experienced in Different Groupings
Out of eight main groups, the “industry” group registered a negative growth of 0.6% in its month-on-month PPI while the “information and telecommunications” group posted the highest month-on-month PPI growth of 9.4% among all groups.
The YOY producer inflation of the “industry” group was at 60.6%—the sharpest year-on-year inflation—while that of “information and telecommunications” group grew 10.3%—the lowest YOY producer inflation among all groups.
The “agriculture, forestry and fishing” group posted a month-on-month rise of 1.5% and a YOY increase of 58.1%.
The group categorized as “transportation and warehousing” registered a monthly rise of 3.3% and a YOY increase of 59.4%.
The “hotel and restaurant” group’s month-on-month PPI increased by 2.7% and its YOY growth was at 38%.
The “education” group recorded a month-on-month rise of 0.1% and a YOY increase of 17.7%.
The “health and social work” group saw a month-on-month rise of 1% and a YOY increase of 19.1% in the PPI index.
The group categorized as “other public, social and individual services” registered a month-on-month rise of 1.1% and a year-on-year rise of 23%.
The month-on-month PPI of the exclusive group of “services” grew by 2.5% and its YOY inflation increased 38.5%.\
PPI vs. CPI
The importance of PPI lies in its predictive content for the future pattern of Consumer Price Index. Changes in PPI are usually reflected in CPI within a short period of time.
PPI gauges the price fluctuations of goods and services for the producer whereas CPI measures changes in the price level of a basket of consumer goods and services purchased by households.
In other words, PPI is an index of prices measured at the wholesale, or producer level. It shows trends within the wholesale markets (as it was once called the Wholesale Price Index), production industries and manufacturing industries and commodities markets from the perspective of the seller.
According to Investopedia, PPI can serve multiple roles in improving investment-making decisions because it can serve as a leading indicator of CPI.
When producers are faced with input inflation, those rising costs are passed along to the retailers and eventually to the consumer.
Furthermore, PPI presents the inflation picture from a different perspective than CPI. Although changes in consumer prices are important for consumers, tracking PPI allows one to determine the cause of the changes in CPI.
If, for example, CPI increases at a much faster rate than PPI, such a situation could indicate that factors other than inflation may be causing retailers to increase their prices.
However, if CPI and PPI increase in tandem, retailers may be simply attempting to maintain their operating margins.
All in all, a decrease in PPI is one of the signs of a probable slowdown in CPI in future months. Almost a perfect correlation exists between CPI and PPI.
The Central Bank of Iran announced in December it would not publish its data, until further notice, on the Consumer Price Index for the Iranian month Azar (Nov. 22-Dec. 21).
CBI's latest inflation report showed the goods and services CPI for urban areas for the Iranian month ending Nov. 21 (Aban), increased by 39.9% compared with the similar month of last year. The overall CPI (using the Iranian year to March 2017 as the base year) stood at 153.6 for the month, indicating a 3.5% increase compared with the previous month.
The average CPI in the 12 months ending Nov. 21 increased by 18.4% compared with last year’s corresponding period.
The Statistical Center of Iran's latest inflation report, though, shows the goods and services CPI registered a year-on-year increase of 39.6% in the Iranian month Dey (Dec. 22, 2018-Jan. 20) compared with the similar month of last year.
SCI had put YOY inflation for the preceding month, Azar, which ended on Dec. 21, at 37.4%.
The overall CPI (using the Iranian year to March 2017 as the base year) stood at 154.7 in Dey, indicating a 2% rise compared with the previous month.
The month-on-month inflation was put at 2.6% for the preceding month.
The average index in the 12-month period ending Jan. 20 increased by 20.6% compared with last year’s corresponding period.
SCI had put the average 12-month inflation rate for the preceding month of Azar at 18%.
The index registered a year-on-year increase of 39% for urban areas and 42.7% for rural areas compared with the similar month of last year.
SCI put the average 12-month inflation for urban and rural areas in Dey at 20.6% and 20.9% respectively.
The overall CPI reached 154.1 for urban households and 158.4 for rural households, indicating an increase of 2% for both urban and rural areas compared with the previous month.
The inflation rate in Iran took an upward trajectory in the wake of the devaluation of national currency after the US unilaterally pulled out of the 2015 nuclear deal Tehran signed with world powers in May 2018. Previously, the rate remained in the single-digit territory for months.
