Iran experienced an average annual inflation rate of 46.5% in the last fiscal year that ended on March 20, 2023, according to the Central Bank of Iran.
CBI says the Consumer Price Index stood at 794.3 in the 12th month of the year, indicating a 6.6% rise compared to the previous month. The bank did not report the year-on-year inflation in the 12th month.
The bank surveys CPI for 12 groups of goods and services. Notably, the “food and beverages” group’s inflation reached 54.6%.
The inflation rates for “transportation”, “health and medical care”, “clothing and shoes”, “home appliances and services”, “communications”, “entertainment and cultural affairs”, “education”, “restaurant and hotel”, “tobacco”, “housing and utilities (water, electricity, gas and other fuel)” and “miscellaneous goods and services” reached 32.3%, 41.9%, 45.9%, 33.3%, 19.3%, 37.8%, 35.1%, 80%, 28.8%, 48.3% and 38.3% respectively.
“Housing and utilities” with 37.05%, “food and beverages” with 25.51% and “transportation” with 8.9% registered the highest coefficient among the groups surveyed.
Monthly CPI reports are also released by the Statistical Center of Iran. The center’s latest report shows inflation has reached a new high.
The average annualized inflation in the 11th month of last Iranian year (Jan. 21-Feb. 19, 2023) stood at 47.7%, SCI said in its latest report.
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 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% saw the highest and lowest YOY inflation respectively.
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.
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 380,000 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.
