Iran's Provincial Inflation at 40-50%

The Statistical Center of Iran’s latest survey of the country’s 31 provinces shows Lorestan registered the highest average annual inflation with 50.2% while Khuzestan posted the lowest with 40% in the current Iranian year’s ninth month (Nov. 22-Dec. 21).
The average goods and services CPI in Iran for the 12-month period ending Dec. 21 increased by 45% compared with the preceding year’s corresponding period.
On a month-on-month basis, the growth in CPI was the highest (2.9%) in Tehran Province, while Kerman Province posted the lowest (0.4%).
The overall CPI, using the Iranian year to March 2017 as the base year, stood at 563 in the month ending Dec. 21, indicating a 1.9% rise compared with the previous month.
The year-on-year inflation for Sistan-Baluchestan was reportedly 61.3%, the highest among all provinces. The year-on-year CPI growth was the lowest for Bushehr Province with 40.7%.
The overall goods and services Consumer Price Index in Iran saw a year-on-year increase of 48.5%.
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 73.9% and “communications” with 7.9%.
The highest and lowest MOM inflation rates were respectively registered for “health and medical treatment” with 8.8% and “food and beverages” with -0.1% month-on-month, respectively.
“Hotels and restaurants” with 78.5% and “communications” with 10.1% saw the highest and lowest YOY inflation 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%, "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%.
 

Urban Areas 

The overall CPI calculated for urban areas stood at 554.4 during the ninth month of the current Iranian year, indicating a 2.1% rise compared with the previous month. 
The growth in CPI measured for provincial urban households compared with the previous month was highest (3%) for North Khorasan while Kerman recorded the lowest monthly inflation rate with an increase of 0.4% compared with other provinces. 
The index registered a year-on-year increase of 47.9% for urban areas. Goods and services CPI of Sistan-Baluchestan’s urban areas registered a year-on-year rise of 56.1% during the month under review, the highest among all provinces. The CPI increase in urban areas was the lowest for Bushehr with 38.1% YOY.
The average CPI in urban areas for the month under review increased by 44.3% compared with the same period of last year. Households living in the urban areas of Ilam experienced the highest annual inflation (with 49.3%) while those of Khuzestan witnessed the lowest annual inflation (39.5%) among all Iranian provinces. 
 

Rural Areas

The overall CPI calculated for rural areas stood at 611 in the month under review, which indicates a 1.2% increase compared with the previous month. 
The growth in CPI of rural households compared with the previous month was highest for Tehran with 2.6%. This is while rural households living in Khuzestan province saw a 0.2% decline.
The index registered an average year-on-year increase of 51.4% for rural areas in the same month. CPI of Sistan-Baluchestan Province’s rural areas registered a YOY increase of 72.9% during the ninth month of the Iranian year, the highest among all provinces, whereas the year-on-year CPI increase was the lowest for Gilan with 43%, compared with other provincial rural areas. 
The average goods and services CPI of rural areas in the month under review increased by 48.6% year-on-year. 
Qazvin registered the highest annual inflation in rural areas (54%) while Khuzestan posted the lowest annual inflation rate (42.4%).
 

Tehran Province

The average goods and services CPI in the 12-month period ending Dec. 21 for Tehran Province, wherein lies the capital city, increased by 43.3% compared with the corresponding period of last year.
SCI had put Tehran’s average annual inflation rate for the preceding Iranian month, which ended on Nov. 21, at 42.2%. 
The consumer inflation for the month under review registered an increase of 47.9% year-on-year while it was 45.8% in the preceding month. 
CPI (using the Iranian year to March 2017 as the base year) of Tehran Province stood at 559.3 in the month ending Dec. 21, indicating a 2.9% rise compared with the month before. Month-on-month consumer inflation was 2.1% for the preceding month. 
SCI put Tehran Province’s urban and rural 12-month inflation rates for the month under review at 43.2% and 44.9%, respectively. 
CPI registered a year-on-year increase of 47.9% for urban areas and 50.9% for rural areas in the month under review. 
The overall CPI reached 558.7 for urban households and 564 for rural households, indicating a month-on-month increase of 2.9% for urban areas and 2.6% for rural areas.
 

 Unprecedented Rise in Prices

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 400,000 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; 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 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.