The Producer Price Index (using 2011 as the base year) stood at 379 in the third quarter of the current Iranian year (Sept. 23-Dec. 21, 2018), indicating an 18.6% increase compared with the previous quarter and a 56.1% increase over the same quarter of last year, the Statistical Center of Iran reported.
Average producer prices in the year ending Dec. 21, 2018, the end of Q3, grew by 35.2% compared with the same period of last year.
The index calculated for the year ending Sept. 22, 2018, the end of Q2, had increased by 24.2%.
Sectoral Breakdown
The agriculture sector's PPI in the year ending Dec. 21 grew by 39.3% compared with the same quarter of last year. The sector’s PPI for the year ending Sept. 22 had increased by 24.1%.
The agriculture sector's PPI stood at 425.9 in Q3, indicating a 21% increase compared with the previous quarter and 68.7% growth over the same quarter of the preceding year.
The mining sector's PPI stood at 380.4 in Q3, indicating a 17.2% increase compared with the previous quarter and a 62.2% growth over the same quarter of last year.
The average PPI for the mining sector in the year ending Dec. 21 increased by 41.9% compared with the same period of last year, SCI said. For the year ending Sept. 22, it had increased by 30.8% year-on-year.
The industrial sector's PPI stood at 420.4 in Q3, indicating a 23.5% increase compared with the previous quarter and a 73.2% growth over the same quarter of last year.
The industrial sector's PPI in the year ending Dec. 21, 2018 grew by 47.3% compared with the same period of last year, the SCI said. The sector’s PPI for the year ending Sept. 22 had increased by 32.9%.
The electricity sector's PPI stood at 120.52 in the third quarter of the current fiscal year (Sept. 23-Dec. 21), indicating a 6.64% growth over the same quarter of last year.
Producer inflation for the electricity sector in the year ending Dec. 21 grew by 0.79% compared with the same period of last year.
The sector’s PPI for the year ending Sept. 22 had declined by 3.65%.
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.
PPI of the industrial sector saw the highest year-on-year rise of 73.2% among other economic sectors
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 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 face 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, which 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.
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.
SCI's latest inflation report shows the goods and services Consumer Price Index in Iran saw a YOY increase of 42.3% in the Iranian month of Bahman (Jan. 21-Feb. 19) compared with the similar month of last year.
The overall CPI (using the Iranian year to March 2017 as the base year) stood at 158.1 in Bahman, indicating a 2.2% rise compared with the previous month.
The average CPI Index in the 12-month period ending Feb. 19 increased by 23.5% compared with last year’s corresponding period.
SCI put the average annual inflation rate for the preceding month of Dey, which ended on Jan. 20, at 20.6%.
The index registered a YOY increase of 41.5% for urban areas and 46.7% for rural areas compared with the similar month of last year.
SCI put average 12-month inflation for urban and rural areas at 23.4% and 24.2% respectively.
The overall CPI reached 157.3 for urban households and 162.9 for rural households, indicating an increase of 2.1% for urban areas and 2.8% for rural areas compared with the previous month.
Rich-Poor Inflation Gap at 2.8%
The average annual inflation gap among income deciles increased 0.1% to reach 2.8% in the Iranian month Bahman (Jan. 21-Feb. 19) compared with the previous month’s 2.7%, another new report by SCI shows.
The average goods and services Consumer Price Index in the 12-month period ending Feb. 19, which marks the end of the Iranian month of Bahman, increased by 22.5% for the first decile (those with the lowest income) whereas it rose by 25.3% for the 10th decile (those with the highest income).
The third, fourth, fifth and sixth deciles saw their 12-month average inflation rate grow by 23.7% compared with last year’s corresponding period.
The annual inflation rate for the second decile increased by 23.4% in Bahman, seventh decile 24.2%, eighth 24.3% and ninth decile 24.6%.
The highest overall CPI stood at 160.1 for the second and third deciles, while the lowest index was 158.6 for the first decile.
The YOY inflation rates increased by 42.2% for the first decile during the month under review, 43.5% for second and third, 43.3% for fourth and eighth, 43.2% for fifth, 43.4% for seventh and ninth, 42.9% for sixth and 44.2% for tenth decile.
Income deciles are groupings that result from ranking either all households or all persons in the population in the ascending order according to income, and then dividing the population into 10 groups, each comprising approximately 10% of the estimated population.
