The Statistical Center of Iran’s latest report reviewing inflation rates in the country’s 31 provinces shows the growth in Consumer Price Index in the current Iranian year’s third month (May 22-June 21) was the highest (18%) in Sistan-Baluchestan, while Khuzestan posted the lowest (8.9%) compared with the previous month.
At the country level, the overall CPI, using the Iranian year to March 2017 as the base year, stood at 482.1 in the month to June 21, indicating a 12.2% rise compared with the previous month — the highest monthly inflation on record in SCI’s database.
Lorestan Province’s goods and services consumer inflation registered a rise of 61.1% during the month ending June 21 compared with the similar month of the year before, the highest among all provinces. The year-on-year CPI growth was the lowest for Khuzestan Province with 45.7%, compared with that of other Iranian provinces.
The overall goods and services CPI in Iran registered a year-on-year increase of 52.5% in the same month.
The average goods and services CPI in Iran for the 12-month period ending June 21 increased by 39.4% compared with the preceding year’s corresponding period.
Kohgilouyeh-Boyerahmad registered the highest average annual inflation with 46.9% while Sistan-Baluchestan posted the lowest at 34.2%.
Impact of Import Subsidy Abolition
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. Instead, it started depositing cash directly to the account of income deciles 1 to 9.
The market value of the dollar is above 300,000 rials at present.
“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 led to a dramatic rise in the prices of essential goods. In fact, the prices of all commodities 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.
Urban Households
The overall CPI calculated for urban areas stood at 473.2 during the third month of the current Iranian year, indicating an 11.5% rise compared with the previous month.
The growth in CPI measured for provincial urban households compared with the previous month was the highest (17.4%) for North Khorasan while Bushehr recorded the lowest monthly inflation rate with an increase of 8.1% compared with other provinces.
The index registered a year-on-year increase of 51.4% for urban areas. Goods and services CPI of Lorestan’s urban areas registered a year-on-year rise of 60.6% during the month under review, the highest among all provinces. The CPI increase in urban areas was the lowest for Khuzestan with 44.8% YOY.
The average CPI in urban areas for the month under review increased by 38.9% compared with the same period of last year. Households living in the urban areas of Kohgilouyeh-Boyerahmad experienced the highest annual inflation (with 45.2%) while those of Sistan-Baluchestan witnessed the lowest annual inflation (33.8%) among all Iranian provinces.
Rural Households
The overall CPI calculated for rural areas stood at 531.9 in the month under review, which indicates a 15.8% increase compared with the previous month.
The growth in CPI of rural households compared with the previous month was highest for Sistan-Baluchestan with 24.2%. This is while rural households living in Mazandaran saw a 10.7% decline in the prices of goods and services compared with the month before, the lowest rate compared with other provinces.
The index registered an average year-on-year increase of 58.2% for rural areas in the same month. CPI of West Azarbaijan Province’s rural areas registered a YOY increase of 66.4% during the third month of the Iranian year, the highest among all provinces, whereas the year-on-year CPI increase was the lowest for Khuzestan with 50.2%, compared with other provincial rural areas.
The average goods and services CPI of rural areas in the month under review increased by 41.8% year-on-year.
Kohgilouyeh-Boyerahmad registered the highest annual inflation in rural areas (50.5%) while Hamedan posted the lowest annual inflation rate (33%).
Tehran Province
The average goods and services CPI in the 12-month period ending June 21 for Tehran Province, wherein lies the capital city, increased by 37.5% compared with the corresponding period of last year.
SCI had put Tehran’s average annual inflation rate for the preceding Iranian month, which ended on May 21, at 36.7%.
The consumer inflation for the month under review registered an increase of 49.3% year-on-year while it was 40.1% in the preceding month.
CPI (using the Iranian year to March 2017 as the base year) of Tehran Province stood at 471.3 in the month to June 21, indicating a 4.6% rise compared with the month before. Month-on-month consumer inflation was 4.6% for the preceding month.
SCI put Tehran Province’s urban and rural 12-month inflation rates for the month under review at 37.4% and 38.8%, respectively.
CPI registered a year-on-year increase of 49.2% for urban areas and 52.6% for rural areas in the month under review.
The overall CPI reached 470.6 for urban households and 496 for rural households, indicating a month-on-month increase of 8.8% for urban areas and 13% for rural areas.
