The average annualized inflation in the second month of the current Iranian year (April 21-May 21) stood at 49.1%, up from 47.6% reported in the previous month and 45.8% in the month before, the Statistical Center of Iran said in a new report released on Wednesday.
The general goods and services Consumer Price Index (using the Iranian year to March 2022 as the base year) stood at 185.5 in the month under review, indicating a month-on-month rise of 2.8% and a year-on-year rise of 54.6%.
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 85.3% and “communications” with 14.3%.
The highest and lowest MOM inflation rates were respectively registered for “tobacco” with 6.4% and “education” with 0.8% month-on-month, respectively.
“Hotels and restaurants” with 84% and “communications” with 23% registered the highest and lowest YOY inflation respectively.
CPI hit 184.1 for urban households and 194.2 for rural households, indicating a month-on-month increase of 2.8 and 2.6%, respectively.
SCI put the annualized inflation for urban and rural areas at 48.2% and 54.5%, respectively. The year-on-year inflation stood at 53.6% for urban areas and 60.3% for rural areas in the month.
Notably, SCI has changed the base year for the CPI from 1395 (March 2016-17) to 1400 (March 2021-22) in five-year updates, as the expenditure weights used to calculate CPI change over time.
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 parity rate of 42,000 rials, 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.
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 28.82%, the CPI of “food and beverages” stood at 224.4 in the month ending May 21, indicating a 2.6% increase from the previous month. The index registered a YOY increase of 76.1% and the CPI of the group increased by 75.7% in the 12-month period to May 21 compared with the corresponding period of last year.
‘Tobacco’
The CPI of “tobacco” was 177.6, indicating a 6.4% rise from the previous month. The tobacco index, which has the least impact on the total inflation rate with a coefficient of 0.62%, registered a YOY increase of 43.5%. The annualized CPI of the group grew by 39.9% compared with the corresponding period of the year before.
‘Clothing and Shoes’
With a coefficient of 4.52%, the CPI of “clothing and shoes” reached 192, indicating a 4% increase over the previous month. The index registered a YOY increase of 52.3% in the month under review. The average annual CPI of the group jumped by 48.6% from last year.
‘Housing and Utilities’
The CPI of “housing and utilities (water, electricity, natural gas and other fuels)” stood at 159.3, indicating a 1.6% rise compared with the previous month. The group’s CPI index, which has the biggest impact on total inflation rate with a coefficient of 36.11%, registered a YOY increase of 38.3%. The annualized CPI of the group was at 34%.
‘Home Appliances, Furniture and Maintenance’
With a coefficient of 4.4%, the CPI of “furniture, home appliances and their maintenance” was 168 – up 4.5% on the previous month. The group’s CPI registered a YOY increase of 43.8% while the average annual CPI of the group increased by 37.5% over last year.
‘Health and Medical Treatment’
The CPI of “health and medical treatment" reached 182.6, indicating a 6.3% increase from the month before. This index, with a coefficient of 6.68%, registered an increase of 57.2% compared with the similar month of last year. The group’s annual inflation during the month was 47.4%.
‘Transportation’
With a coefficient of 8.93%, the “transportation” CPI was 189.1, up 1.9% on the month before. This index registered a YOY increase of 58.2% and its annualized CPI increased by 41.7%.
‘Communications’
The CPI of “communications” stood at 129.9, up 2.7% compared with the month before. With a coefficient of 2.41%, it showed a YOY increase of 23% while the annualized inflation reached 14.3%.
‘Leisure and Culture’
The “leisure and culture” CPI stood at 175.4, indicating a 5.3% rise compared with that of the previous month. With a coefficient of 0.87%, it saw a YOY increase of 48.2%, as its annualized inflation hit 39.2%.
‘Education’
With a coefficient of 0.88%, the CPI of “education” was 151.2, indicating a 0.8% rise from the month before. The group’s CPI index registered a YOY increase of 34.5% while the annualized CPI of the group surged to 33.7%.
‘Hotels and Restaurants’
The “hotels and restaurants” CPI came in at 248.1, up 5.1% over the previous month. With a coefficient of 1.35%, the YOY increase was 84% and annualized inflation was at 85.3%.
‘Miscellaneous’ Goods and Services'
The CPI of goods and services in the “miscellaneous” group was 174.8, indicating a 4.8% growth compared to the previous month. With a coefficient of 4.42%, this index was up 46.5% and its average annual inflation hovered near 36.7%.
