The country’s Gini Index reached 0.3992 in the last fiscal year (March 2019-20) compared with the previous year’s 0.4093, the head of the Statistical Center of Iran said.
“SCI has yet to give a detailed analysis as to how the Gini Index declined but higher inflation rates for high-income deciles might have contributed to it,” Javad Hosseinzadeh was also quoted as saying by Fars News Agency.
The average goods and services Consumer Price Index in the 12-month period ending March 19, which marks the end of the last Iranian year, increased by 33.9% for the first decile (those with the lowest income) while it grew 36.6% for the 10th decile (those with the highest income), according to SCI.
Income deciles are groupings that result from ranking either all households or all persons in the population in the ascending order based on income, and then dividing the population into 10 groups, each comprising approximately 10% of the estimated population.
The average annual inflation gap measured by the Statistical Center of Iran among income deciles stood at 2.7% in the 12th Iranian month (Feb. 20-March 19), indicating a 0.1 percentage point increase compared with the previous month.
The inflation gap in food, beverages and tobacco group among income deciles decreased by one percentage point and that of non-food and services group dropped by 0.9 percentage point month-on-month.
Average inflation rates grew by 34.6% for the second and third deciles compared with last year’s corresponding period. The annual inflation rate for the fourth and sixth deciles increased by 34.7%, for the fifth decile 34.8%, for seventh decile 35%, for eighth 35.2% and for the ninth decile 35.6%.
The highest overall CPI (using the Iranian year to March 2017 as the base year) stood at 209.8 for the 10th decile and the lowest was 196.5 calculated for the first decile.
The year-on-year inflation rates increased by 19.5% for the first decile during the month under review, 20% for second, 20.4% for third, 20.6% for fourth, 20.9% for fifth, 21.2% for sixth, 21.9% for seventh, 22.2% for eighth, 23.1% for ninth and 24.4% for the 10th decile.
The Gini Coefficient ranks income inequality on a scale of zero—no inequality—to one, the maximum level of inequality. In other words, the closer the number is to one, the more wealth is concentrated in the hands of fewer people, thus the bigger income disparity. Because of the way the scale is constructed, a modest-sounding difference in the Gini ratio implies a big difference in inequality.
Compared to the fiscal 2017-18, the Gini Index for the fiscal 2018-19 increased by 0.0112 points or 2.8%.
In fact, the index for the fiscal 2018-19 was the highest since the Iranian year ending March 2011.
Revenues earned from durable items, including real estate and gold, in that year might have been behind the increase in urban households’ income, particularly those who fall in high-income deciles.
The growth in food and tobacco expenses, according to the Plan and Budget Organization, was one of the major drivers of Gini Index in the fiscal 2018-19.
Gross food expenditure in urban areas that year jumped by 23% compared with the year before, around 4% more than non-food expenses. This is while the gap between increases in food and non-food expenditure was 0.8% for rural households.
The average annual growth of food expenditure for rural households was close to 20%, which is 2.4% less than that of urban households. In fact, the rise in food expenditure leads to more pressure on low-income families and deepens wealth disparity, as food plays a more significant role in the consumer basket of people of modest means.
