The average annual inflation gap measured by the Statistical Center of Iran among income deciles stood at 4.4% in the third Iranian month (May 22-June 21), up 1 percentage point from the previous month.
The inflation gap in “food, beverages and tobacco” group among income deciles declined by 0.1 percentage points and that of “non-food and services” group grew by 0.1 percentage points compared with the previous month.
The average goods and services Consumer Price Index in the 12-month period ending June 21 increased by 42.7% for the first decile (those with the lowest income) and grew by 38.3% for the 10th decile (those with the highest income).
The annual inflation of “food, beverages and tobacco” surged by 52.2% for the first decile as well as for the 10th decile. “Non-food and services” inflation grew by 32% for the first decile and 34.8% for the 10th decile.
Average annual inflation rates swelled by 42% for the second decile compared with last year’s corresponding period; 41% for the third decile; 40.5% for the fourth; 40% for the fifth; 39.5% for the sixth; 39% for the seventh; 38.5% for the eighth and 38.3% for the ninth decile.
The highest overall CPI (using the Iranian year to March 2017 as the base year) stood at 454.5 for the 10th decile and the lowest was 341.2 for the first decile.
The first decile registered a month-on-month inflation of 19.5%, the second registered 17.9%, the third registered 16.6% growth, the fourth registered 15.8%, the fifth registered 14.8%, the sixth registered 14.1%, the seventh registered 13.1%, the eighth registered 11.9%, the ninth registered 10.6% growth and the 10th decile posted 8.4%.
The year-on-year inflation rates increased by 64% for the first decile during the month under review, 61% for the second, 58.3% for the third, 56.9% for the fourth, 55.2 for the fifth, 54.1% for the sixth, 52.8% for the seventh, 51.2% for the eighth and 50.4% for the ninth decile and 49% for the 10th 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.
Inflation Hits Record High
The SCI data confirm that inflation in Iran has reached an unprecedented level.
Food prices increased by 25.9% in the third month of the current Iranian year (May 22-June 21) compared to the previous month, according to the center.
The record high monthly inflation came 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 Preferential Foreign Currency, for the import of essential goods, including corn, soymeal, unprocessed oil, oilseeds and barley, in addition to wheat, flour and medicine, the way it has been paying to date.
Instead, it is depositing cash directly to the account of income deciles 1 to 9.
The market value of the dollar is above 300,000 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 last month.
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 drastic rise in the prices of essential goods.
Also known as necessity or basic goods, essential goods are products consumers will buy, regardless of changes in income levels.
Ripple Effect
In fact, the prices of all commodities have risen suddenly in a ripple effect.
The general goods and services Consumer Price Index stood at 482.1 in the month ending June 21, indicating a 12.2% rise compared to the previous month. This is the highest monthly price rise on record in SCI’s database (since 2018).
Month-on-month consumer inflation was 3.5% in the preceding month.
The average CPI in the 12 months to June 21 increased by 39.4% compared with the corresponding period of the year before.
SCI had put the average annual inflation rate for the preceding Iranian month (ended May 21) at 38.7%.
Consumer price inflation for the month under review jumped by 52.5% over the same month of the previous fiscal year while year-on-year inflation in the month ending May 21 was 39.3%.
SCI put average inflation for urban and rural areas at 38.9% and 41.8%, respectively. CPI registered a YOY increase of 51.4% for urban areas and 58.2% for rural areas in the month.
CPI reached 473.2 for urban households and 531.9 for rural households, indicating a month-on-month increase of 11.5% and 15.8%, respectively.
The highest and lowest monthly growth in the index among 12 groups of the basket of consumer goods and services purchased by households in the Iranian month ending June 21 was recorded for “food and beverages” with 25.9% and “education” at 1.1% month-on-month.
The highest year-on-year inflation in the month under review was logged by “hotels and restaurants” with 86.4% while the lowest YOY inflation was registered by “communications” with 9.8%.
The highest and lowest annualized inflation rates were registered for “hotels and restaurants” with 63.7% and “communications” with 4.7%.
