“Transportation”, one of 12 groups of goods and services surveyed by the Statistical Center of Iran, registered an average annualized inflation rate of 39.1% in the 11th month of the current Iranian year (Jan. 21-Feb. 19).
The month-on-month and year-on-year inflation rates of the group reached 3.5% and 50.2% 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%.
New SCI data show the annualized inflation reported by the center on a monthly basis has reached a new high. The average annualized inflation in the month under review stood at 47.7%.
Only in the fiscal 1995-96 and 1996-97 did the country 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 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 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% saw 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 500,000 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.
