The average annualized inflation in the third month of the current Iranian year (May 22-June 21) stood at 48.5%, down from 49.1% in the previous month, the Statistical Center of Iran said in a new report released on Wednesday.
This is the first time in a year that inflation has registered a fall, as indicated in SCI’s monthly report.
The general goods and services Consumer Price Index (using the Iranian year to March 2022 as the base year) stood at 189.3 in the month under review, indicating a month-on-month rise of 2% and a year-on-year rise of 42.6%.
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 82% and “communications” with 15.2%.
The highest and lowest MOM inflation rates were respectively registered for “hotels and restaurants” with 6.2% and “transportation” with -2% month-on-month, respectively.
“Hotels and restaurants” with 62.5% and “communications” with 21% registered the highest and lowest YOY inflation respectively.
CPI hit 187.9 for urban households and 197.8 for rural households, indicating a month-on-month increase of 2.1 and 1.8%, respectively.
SCI put the annualized inflation for urban and rural areas at 47.7% and 53.3%, respectively. The year-on-year inflation stood at 42.5% for urban areas and 43.2% for rural areas in the month.
Notably, in the current Iranian year that started on March 21, SCI changed the base year for CPI from the fiscal 2016-17 to 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 just below 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 228.3 in the month ending June 21, indicating a 1.7% increase from the previous month. The index registered a YOY increase of 42.6% and the CPI of the group increased by 71.3% in the 12-month period to June 21 compared with the corresponding period of last year.
*** ‘Tobacco’
The CPI of “tobacco” was 183.9, indicating a 3.5% 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 42.6%. The annualized CPI of the group grew by 40% 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 198.4, indicating a 3.3% increase over the previous month. The index registered a YOY increase of 49.2% in the month under review. The average annual CPI of the group jumped by 48.7% from last year.
*** ‘Housing and Utilities’
The CPI of “housing and utilities (water, electricity, natural gas and other fuels)” stood at 163.5, 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 36.11%, registered a YOY increase of 38.6%. The annualized CPI of the group was at 34.7%.
*** ‘Home Appliances, Furniture and Maintenance’
With a coefficient of 4.4%, the CPI of “furniture, home appliances and their maintenance” was 173.2 – up 3.1% on the previous month. The group’s CPI registered a YOY increase of 39.6% while the average annual CPI of the group increased by 37.9% over last year.
*** ‘Health and Medical Treatment’
The CPI of “health and medical treatment" reached 191.4, indicating a 4.8% increase from the month before. This index, with a coefficient of 6.68%, registered an increase of 53.9% compared with the similar month of last year. The group’s annual inflation during the month was 48.8%.
*** ‘Transportation’
With a coefficient of 8.93%, the “transportation” CPI was 185.4, down 2% on the month before. This index registered a YOY increase of 50% and its annualized CPI increased by 43%.
*** ‘Communications’
The CPI of “communications” stood at 129.7, down 0.1% compared with the month before. With a coefficient of 2.41%, it showed a YOY increase of 21% while the annualized inflation reached 15.2%.
*** ‘Leisure and Culture’
The “leisure and culture” CPI stood at 180.6, indicating a 3% rise compared with that of the previous month. With a coefficient of 0.87%, it saw a YOY increase of 45.9%, as its annualized inflation hit 40.1%.
*** ‘Education’
With a coefficient of 0.88%, the CPI of “education” was 151.9, indicating a 0.5% rise from the month before. The group’s CPI index registered a YOY increase of 34% while the annualized CPI of the group surged to 34.1%.
*** ‘Hotels and Restaurants’
The “hotels and restaurants” CPI came in at 263.4, up 6.2% over the previous month. With a coefficient of 1.35%, the YOY increase was 62.5% and annualized inflation was at 82%.
*** ‘Miscellaneous Goods and Services'
The CPI of goods and services in the “miscellaneous” group was 176.5, indicating a 1% growth compared to the previous month. With a coefficient of 4.42%, this index was up 40.9% and its average annual inflation hovered near 37.4%.
