New data released by the Statistical Center of Iran show the annualized inflation reported on a monthly basis has scaled new heights.
The average annualized inflation in the 11th month of the current Iranian year (Jan. 21-Feb. 19) stood at 47.7%, SCI said in a new report released on Tuesday.
Only in the fiscal 1995-96 and 1996-97 did the country experience inflation rates above the current level.
This is the ninth 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 608 in the month under review, indicating a month-on-month rise of 3.5% and a year-on-year rise of 53.4%.
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 76.4% and “communications” with 9.8%.
The highest and lowest MOM inflation rates were respectively registered for “food and beverages” with 4.8% and “education” with 0.5% month-on-month, respectively.
“Hotels and restaurants” with 78.9% and “communications” with 15.3% registered the highest and lowest YOY inflation respectively.
CPI hit 598.3 for urban households and 662.3 for rural households, indicating a month-on-month increase of 3.4 and 4%, respectively.
SCI put the annualized inflation for urban and rural areas at 46.9% and 51.7%, respectively. The year-on-year inflation stood at 52.7% for urban areas and 56.7% 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 480,000 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.
Price changes experienced by the 12 groups of consumer goods and services surveyed by SCI are as follows:
‘Food and Beverages’
With a coefficient of 26.64%, the CPI of “food and beverages” stood at 911.8 in the month ending Feb. 19, indicating a 4.8% increase from the previous month. The index registered a YOY increase of 71.5% and the CPI of the group increased by 68% in the 12-month period to Feb. 19 compared with the corresponding period of last year.
‘Tobacco’
The CPI of “tobacco” was 797.6, indicating a 1.8% 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 33.7%. 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 690.2, indicating a 3.2% increase over the previous month. The index registered a YOY increase of 46.5% in the month under review. The average annual CPI of the group jumped by 47.1% from last year.
‘Housing and Utilities’
The CPI of “housing and utilities (water, electricity, natural gas and other fuels)” stood at 379.2, indicating a 2.6% 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 39.9%. The annualized CPI of the group was at 33.3%.
‘Home Appliances, Furniture and Maintenance’
With a coefficient of 3.93%, the CPI of “furniture, home appliances and their maintenance” was 720.8 – up 2.5% on the previous month. The group’s CPI registered a YOY increase of 36.1% while the average annual CPI of the group increased by 34.1% over last year.
‘Health and Medical Treatment’
The CPI of “health and medical treatment" reached 480.7, indicating a 1.6% increase from the month before. This index, with a coefficient of 7.14%, registered an increase of 54.3% compared with the similar month of last year. The group’s annual inflation during the month was 41.1%.
‘Transportation’
With a coefficient of 9.41%, the “transportation” CPI was 750, up 3.5% on the month before. This index registered a YOY increase of 50.2% and its annualized CPI increased by 39.1%.
‘Communications’
The CPI of “communications” stood at 214.7, up 2.1% compared with the month before. With a coefficient of 2.87%, it showed a YOY increase of 15.3% while the annualized inflation reached 9.8%.
‘Leisure and Culture’
The “leisure and culture” CPI stood at 652.3, indicating a 2.8% rise compared with that of the previous month. With a coefficient of 1.65%, it saw a YOY increase of 32.6%, as its annualized inflation hit 30.8%.
‘Education’
With a coefficient of 1.86%, the CPI of “education” was 356.3, indicating a 0.5% rise from the month before. The group’s CPI index registered a YOY increase of 31.8% while the annualized CPI of the group surged to 31.4%.
‘Hotels and Restaurants’
The “hotels and restaurants” CPI came in at 791.5, up 3.2% over the previous month. With a coefficient of 1.44%, the YOY increase was 78.9% and annualized inflation was at 76.4%.
‘Miscellaneous’ Goods and Services
The CPI of goods and services in the “miscellaneous” group was 586.8, indicating a 2.9% growth compared to the previous month. With a coefficient of 4.18%, this index was up 40.4% and its average annual inflation hovered near 36.1%.
