The average annualized inflation in the fifth month of the current Iranian year (July 23-Aug. 22) was at 41.5%, the Statistical Center of Iran announced in its latest report released on Tuesday.
The general goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) stood at 514.2 in the month under review, indicating a month-on-month rise of 2% and a year-on-year rise of 52.2%.
Among 12 groups of goods and services reviewed by SCI, the highest and lowest annualized inflation rates were respectively registered for “hotels and restaurants” with 67.9% and “communications” with 5.3%.
The highest MOM inflation rates were respectively registered for “home appliances, furniture and maintenance” with 3.6% and “communications” at 1.1% month-on-month.
“Hotels and restaurants” with 83.1% and “communications” with 11% saw the highest and lowest YOY inflation respectively.
CPI hit 504.8 for urban households and 567.1 for rural households, indicating a month-on-month increase of 2% and 1.7%, respectively.
SCI put the annualized inflation for urban and rural areas at 40.9% and 44.4%, respectively.
The year-on-year inflation stood at 51.1% for urban areas and 58.4% for rural areas in the month.
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 currently 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 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 a dramatic 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.
In fact, the prices of all commodities and services have also risen suddenly in a ripple effect.
Below are the details of price changes experienced by the 12 groups of consumer goods and services as reported by SCI:
‘Food and Beverages’
With a coefficient of 26.64%, the CPI of “food and beverages” stood at 790.9 in the month ending Aug. 22, indicating a 1.4% increase from the previous month. The index registered a YOY increase of 81.2% and the CPI of the group increased by 57.4% in the 12-month period to Aug. 22 compared with the corresponding period of last year.
‘Tobacco’
The CPI of “tobacco” was 720.6, indicating a 2.6% rise from the previous month. The tobacco index, which has the least impact on the total inflation rate with a coefficient of 0.59%, registered a YOY increase of 48.1%. The annualized CPI of the group grew by 37.7% compared with the corresponding period of the year before.
‘Clothing and Shoes’
With a coefficient of 4.78%, the CPI of “clothing and shoes” reached 587.5, indicating a 2.7% increase over the previous month. This index registered a YOY increase of 48.6% in the month under review. The average annual CPI of the group jumped by 48.3% from last year.
‘Housing and Utilities’
The CPI of “housing and utilities (water, electricity, natural gas and other fuels)” stood at 311.7, indicating a 2.8% rise compared with the previous month. The group’s CPI index, which has the biggest impact on the total inflation rate with a coefficient of 35.5%, registered a YOY increase of 32.2%. Annualized CPI of the group was at 28.4%.
‘Home Appliances, Furniture and Maintenance’
With a coefficient of 3.93%, the CPI of “furniture, home appliances and their maintenance” was 639.1 – up 2.4% on the previous month. The group’s CPI registered a YOY increase of 37.1% while the average annual CPI of the group increased by 35.8% over last year.
‘Health and Medical Treatment’
The CPI of “health and medical treatment" was 389.5, indicating a 3.6% increase from the month before. This index, with a coefficient of 7.14%, registered an increase of 39.6% compared with the similar month of last year. The group’s annual inflation during the month was 35.5%.
‘Transportation’
With a coefficient of 9.41%, the “transportation” CPI was 595.4, up 1.2% on the month before. This index registered a YOY increase of 38.4% and its annualized CPI increased by 35.4%.
‘Communications’
The CPI of “communications” stood at 197.6, up 1.1% compared with the month before. With a coefficient of 2.87%, it showed a YOY increase of 11% while the annualized inflation reached 5.3%.
‘Leisure and Culture’
The “leisure and culture” CPI stood at 568.5, indicating a 1.8% rise compared with that of the previous month. With a coefficient of 1.65%, it saw a YOY increase of 31.4%, as its annualized inflation hit 31.6%.
‘Education’
With a coefficient of 1.86%, the CPI of “education” was 294.6, indicating a 2.9% rise from the month before. The group’s CPI index registered a YOY increase of 33.3% while the annualized CPI of the group surged to 27.8%.
‘Hotels and Restaurants’
The “hotels and restaurants” CPI came in at 660.7, up 3% over the previous month. With a coefficient of 1.44%, the YOY increase was 83.1% and annualized inflation was at 67.9%.
‘Miscellaneous’ Goods and Services
The CPI of goods and services in the “miscellaneous” group was 513.8, indicating a 1.7% growth compared to the month before. With a coefficient of 4.18%, this index was up 37.2% and its average annual inflation hovered near 35.8%.
