The average annualized inflation in the eighth month of the current Iranian year (Oct. 23-Nov. 21) stood at 44%, the Statistical Center of Iran announced in a new report released on Tuesday.
This is the sixth consecutive month the annualized inflation is rising after the government put into effect what it touted as “economic surgery” by abolishing the heavily subsidized import of essential goods.
The general goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) stood at 552.4 in the month under review, indicating a month-on-month rise of 2.1% and a year-on-year rise of 48.1%.
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 72.5% and “communications” with 7.2%.
The highest MOM inflation rates were respectively registered for “health and medical treatment” with 4% and “communications” at 0.9% month-on-month.
“Hotels and restaurants” with 79.3% and “communications” with 10.2% saw the highest and lowest YOY inflation respectively.
CPI hit 543.2 for urban households and 603.7 for rural households, indicating a month-on-month increase of 2.1 and 2.1%, respectively.
SCI put the annualized inflation for urban and rural areas at 43.3% and 47.4%, respectively.
The year-on-year inflation stood at 47.3% for urban areas and 52.3% for rural areas in the month.
The rise in prices of goods and services accelerated at an unprecedented pace, ever since 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 details of price changes experienced by the 12 groups of consumer goods and services surveyed by SCI:
‘Food and Beverages’
With a coefficient of 26.64%, the CPI of “food and beverages” stood at 836.4 in the month ending Nov. 21, indicating a 1.3% increase from the previous month. The index registered a YOY increase of 68.4% and the CPI of the group increased by 61.8% in the 12-month period to Nov. 21 compared with the corresponding period of last year.
‘Tobacco’
The CPI of “tobacco” was 751.3, indicating a 1.1% rise from the previous month. The tobacco index, which has the least impact on the inflation rate with a coefficient of 0.59%, registered a YOY increase of 39.4%. The annualized CPI of the group grew by 40.4% 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 635.6, indicating a 2.6% increase over the previous month. The index registered a YOY increase of 46.7% in the month under review. The average annual CPI of the group jumped by 47.6% from last year.
‘Housing and Utilities’
The CPI of “housing and utilities (water, electricity, natural gas and other fuels)” stood at 351.5, indicating a 3.5% rise compared with the previous month. The group’s CPI index, which has the biggest impact on total inflation rate with a coefficient of 35.5%, registered a YOY increase of 36%. The annualized CPI of the group was at 30.4%.
‘Home Appliances, Furniture and Maintenance’
With a coefficient of 3.93%, the CPI of “furniture, home appliances and their maintenance” was 672, up 1.6% on the previous month. The group’s CPI registered a YOY increase of 34.2% while the average annual CPI of the group increased by 33.9% over last year.
‘Health and Medical Treatment’
The CPI of “health and medical treatment" was 418.5, indicating a 4% increase from the month before. This index, with a coefficient of 7.14%, registered an increase of 41.5% compared with the similar month of last year. The group’s annual inflation during the month was 36%.
‘Transportation’
With a coefficient of 9.41%, the “transportation” CPI was 617.4, up 2.1% on the month before. This index registered a YOY increase of 32.1% and its annualized CPI increased by 36.6%.
‘Communications’
The CPI of “communications” stood at 202.9, up 0.9% compared with the month before. With a coefficient of 2.87%, it showed a YOY increase of 10.2% while the annualized inflation reached 7.2%.
‘Leisure and Culture’
The “leisure and culture” CPI stood at 607.2, indicating a 1.4% rise compared with that of the previous month. With a coefficient of 1.65%, it saw a YOY increase of 31.2%, as its annualized inflation hit 30.6%.
‘Education’
With a coefficient of 1.86%, the CPI of “education” was 351.8, indicating a 1% rise from the month before. The group’s CPI index registered a YOY increase of 33.9% while the annualized CPI of the group surged to 30.5%.
‘Hotels and Restaurants’
The “hotels and restaurants” CPI came in at 726.5, up 1.7% compared to the previous month. With a coefficient of 1.44%, the YOY increase was 79.3% and annualized inflation was at 72.5%.
‘Miscellaneous’ Goods and Services
The CPI of goods and services in the “miscellaneous” group was 540.6, indicating a 1.7% growth compared to the previous month. With a coefficient of 4.18%, this index was up 35.8% and its average annual inflation hovered near 35.3%.
