“Housing and utilities (water, electricity, natural gas and other fuels)”, one of 12 groups of goods and services surveyed by the Statistical Center of Iran, registered an average annualized inflation rate of 30.4% in the eighth month of the current Iranian year (Oct. 23-Nov. 21).
The group’s month-on-month and year-on-year inflation rates were 3.5% and 36% 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%, "tobacco" with 0.59%, "clothing and shoes" with 4.78%, “housing and 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 overall annualized inflation in the month under review 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 years of 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, 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 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 around 350,000 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.
