‘Education’ Inflation at 34.1%

“Education”, one of 12 groups of goods and services surveyed by the Statistical Center of Iran for calculating the inflation rate, registered an annualized inflation rate of 34.1% in the third month of the current Iranian year (May 22-June 21).
The group’s month-on-month and year-on-year inflation stood at 0.5% and 34% receptively.
The overall 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 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% recorded 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.
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 presently around 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 2022.
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.