Economy, Domestic Economy

Producer Price Inflation Falls to Single Digit

Producer Price Inflation Falls to Single DigitProducer Price Inflation Falls to Single Digit

Monthly producer price inflation decreased by 2.4 percent in the Iranian month of Farvardin (March 21-April 20), bringing the rate into single digit territory for the first time in years, according to the latest Central Bank data.

On a yearly basis, the Producer Price Index (PPI) grew by 8.9 percent in Farvardin, which indicates a significant drop compared to previous years. Last year, annual inflation was 10.4 percent higher, at 19.3 percent. Compared to two years ago, PPI inflation has fallen by 32.2 percent, when the index reached a record high of 41.1 percent.

One of the most important contributing factors to the single-digit PPI inflation has been low inflation in the construction industry. The construction industry is one of the largest industries in Iran and a crucial engine behind private sector growth.

While the PPI measures price changes from the perspective of the seller, the Consumer Price Index (CPI) is still significantly higher.

The CPI has stabilized over the past five months at around 16.5 percent. CPI inflation is expected to remain higher as the government is pushing through with a subsidy reform program that aims to bring petrol prices more in line with regional averages, as well as lower subsidies on a range of consumer goods.