“Food and beverages”, one of the 12 groups of goods and services surveyed by the Statistical Center of Iran, registered an average annualized inflation rate of 68% in the 11th month of the current Iranian year (Jan. 21-Feb. 19).
The group’s month-on-month and year-on-year inflation rates stood at 4.8% and 71.5% respectively, new data released by SCI show.
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 to Feb. 19 stood at 47.7%. Only in the fiscal 1995-96 and 1996-97 did Iran experience inflation rates above the current level.
Notably, 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 overall goods and services Consumer Price Index (using the Iranian year to March 2017 as the base year) stood at 608 in the month ending Jan. 20, indicating a 3.5% rise, and a year-on-year rise of 53.4%.
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 registered for “food and beverages” with 4.8% and “education” with 0.5% month-on-month, 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 550,000 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 of 53 Edible Foods Reviewed
SCI has also published the price changes of 53 food products in urban areas during the month under review in a new report.
The biggest month-on-month price rise for a food item was recorded for bell pepper with 31.1%, which was sold at 298,152 rials (53 cents) per kilogram.
The second and third biggest month-on-month price increases were registered for eggplant with 26.2% and cucumber with 23.7%. Eggplant was sold at 206,658 rials (38 cents) per kilogram and cucumber went for 254,828 rials (45 cents) per kilogram.
Two out of 53 food items experienced a price decline compared with the previous month: chicken with 1.9% and pasteurized milk with 1% were sold for 556,645 rials (99 cents) and 634,609 rials ($1.13), respectively.
Compared with the same month of the previous year, the retail prices of vegetable oil increased by 294.4%, registering the highest year-on-year price rise. It was sold at 689,794 rials ($1.22) per 900 grams. The second and third biggest year-on-year price rise was registered for hydrogenated oil with 282.9% and onion with 222%. A kilogram of hydrogenated oil was priced at 764,794 rials ($1.36) and a kilogram of onion went for 280,177 rials (49 cents).
