The average annual inflation gap measured by the Statistical Center of Iran among income deciles stood at 5.8% in the fourth month of the current Iranian year (June 22-July 22), up 1.4 percentage points from the previous month.
The inflation gap in “food, beverages and tobacco” group among income deciles grew by 0.5 percentage points and that of “non-food and services” group remained unchanged compared with the previous month.
The average goods and services Consumer Price Index in the 12-month period ending July 22 increased by 44.8% for the first decile (those with the lowest income) and grew by 38.9% for the 10th decile (those with the highest income).
The annual inflation of “food, beverages and tobacco” surged by 55.9% for the first decile and increased by 55% for the 10th decile. “Non-food and services” inflation grew by 32.1% for the first decile and 34.9% for the 10th decile.
Average annual inflation rates swelled by 43.8% for the second decile compared with last year’s corresponding period; 42.6% for the third decile; 42% for the fourth; 41.4% for the fifth; 40.8% for the sixth; 40.2% for the seventh; 39.6% for the eighth and 39.3% for the ninth decile.
The highest overall CPI (using the Iranian year to March 2017 as the base year) stood at 540 for the first and second deciles and the lowest was 506.1 for the eighth decile.
The first and second deciles each registered month-on-month inflation of 5%, the third registered 4.9% growth, the fourth and fifth deciles each registered 4.8%, the sixth 4.7%, the seventh 4.6%, the eighth 4.5%, the ninth 4.3% growth and the 10th decile posted 3.9%.
The year-on-year inflation rates increased by 66.7% for the first decile during the month under review, 63.5% for the second, 60.7% for the third, 59.2% for the fourth, 57.4% for the fifth, 56.2% for the sixth, 54.7% for the seventh, 52.9% for the eighth and 51.6% for the ninth 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.
Irrespective of income deciles, the general goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) stood at 504.3 in the month to July 22 to register a record high of 54% compared to the similar period of last year.
Year-on-year inflation was reported at 52.5%.
The month-on-month and annualized inflation stood at 4.6% and 40.5% respectively.
Urban, Rural Inflation Rates
SCI put the annualized inflation for urban and rural areas at 40% and 43.2%, respectively. The year-on-year inflation stood at 52.8% for urban areas and 60.7% for rural areas in the month.
CPI hit 494.7 for urban households and 557.6 for rural households, indicating a month-on-month increase of 4.8% and 4.6%, 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 July 22 was recorded for “health and treatment” with 6.1% and “communications” at 1% month-on-month.
The highest year-on-year inflation was registered for the “food and beverage” group with 87% while “communications” saw the lowest YOY rate of 10.8%.
The highest and lowest annualized inflation rates were registered for “hotels and restaurants” with 65.9% and “communications” with 5%.
The rise in prices of goods and services accelerated at an unprecedented pace 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 the Preferential Foreign Currency, to import essential goods, including corn, soymeal, unprocessed oil, oilseeds and barley, in addition to wheat, flour and medicine.
The market value of the dollar is above 300,000 rials now.
“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 in May.
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 dramatic rise in the prices of essential goods.
In fact, the prices of all commodities and services 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.
