“Food and beverages”, one of the 12 groups of goods and services surveyed by the Statistical Center of Iran, registered an annualized inflation rate of 59% in the sixth month of the current fiscal year (Aug. 23-Sept. 22).
The group’s month-on-month and year-on-year inflation rates reached 2.2% and 76.1% respectively.
The 12 groups of the basket of consumer goods and services surveyed by SCI include "food and beverages" with a coefficient of 26.64% (second highest), "tobacco" with 0.59%, "clothing and shoes" with 4.78%, "utilities" with 35.5% (highest), "furniture, home appliances and their maintenance" with 3.93%, "health and treatment" with 7.14%, "transportation" with 9.41%, "communications" with 2.87%, "leisure and culture" with 1.65%, "education" with 1.86%, "hotels and restaurants" with 1.44% and "miscellaneous items and services" with 4.18%.
The annualized inflation in the month ending Sept. 22 was reported to be 42.1% by the Statistical Center of Iran.
The general goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) reached 525.4 in the month under review, indicating a month-on-month rise of 2.2% and a year-on-year rise of 49.7%.
Among the 12 groups, the highest and lowest annualized inflation rates were respectively registered for “hotels and restaurants” with 69.8% and “communications” with 5.7%.
The “food and beverage” group’s month-on-month and year-on-year inflation rates reached 2.2% and 76.1% respectively
The highest MOM inflation rates were respectively registered for “hotels and restaurants” with 4.9% and “transportation” at 0.2% month-on-month.
“Hotels and restaurants” with 84.4% and “communications” with 10.4% registered the highest and lowest YOY inflation respectively.
CPI hit 515.7 for urban households and 579.8 for rural households, each indicating a month-on-month increase of 2.2%.
SCI put the annualized inflation for urban and rural areas at 41.5% and 45.3%, respectively.
The year-on-year inflation stood at 48.4% for urban areas and 56.3% 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.
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.
More than 60% of respondents in a recent survey said they think negatively of the recent subsidy reforms implemented by the government, mainly because after the implementation of the measure, the prices of items other than essential goods also increased.
A pollster, affiliated to Majlis Research Center – the research arm of Iranian Parliament, found that over 58% of respondents prefer the government to reduce the prices of essential goods to last year’s level compared to 28% who prefer to receive direct monthly cash subsidies.
