Economy, Domestic Economy

Inflation Drops 1.5%

Inflation Drops 1.5%Inflation Drops 1.5%

The inflation rate for the seventh month of the Iranian calendar, ending on October 22, dropped 1.5 percent to reach 19.1 from 20.6 in the previous month (Shahrivar, August 22-September 22), the Statistical Center of Iran announced on Sunday.

The year-on-year inflation for the past month stood at 14.2, without registering any changes compared to the same period last year.

Iran has experienced high inflation rates in recent years, owing both to the government’s economic policy – including the execution of the second phase of the subsidy reform plan, cash handouts and expansionary funding of housing projects – and the impact of Western sanctions, which intensified in 2010 following a dispute over Tehran’s nuclear energy program.  

Prices skyrocketed in 2013 as both the official and the unofficial foreign exchange rates weakened sharply and trade restrictions prompted shortages.

Inflation averaged 39 percent in 2013 (the Iranian calendar year of 1392). However, the Rouhani administration, which took power last summer, has focused on taming inflation. Since the government started to implement its economic plans, inflation rate has plummeted from a peak of 45.1 percent year-on-year in June 2013 to 14.6 percent in July 2014. For the January-July period inflation has averaged 18.9 percent year-on-year. A sharp downward trend in food price inflation, helped by weak global prices, has also contributed significantly to lower inflation, the SCI report report said.

The Rouhani administration has tried to turn the recession around by trying to put state finances in order, professionalizing its economic policy and working with the international community to reduce the impact of sanctions.