Economy, Domestic Economy

Inflation Rebound Predicted

Saeed LeylazSaeed Leylaz

Iran’s inflation will bounce back to 12-13% in the next fiscal year (starting March 21, 2017) due to the high monetary expansion rate, says economist Saeed Leylaz.

The 50-year-old Shahid Beheshti professor said the government has been unsuccessful in bringing down money supply growth rate below 30% per year, which is alarming, IRNA reported.

“Until further notice, there is the danger of hitting double digit inflation next year,” Leylaz said.

Inflation in the rolling 12-month ending June 20, which marks the end of the Iranian month of Khordad, dropped to 9.7%, the Central Bank of Iran reported. It was the first time inflation fell below the 10% mark in 26 years. The last time was in 1990 when Iran was emerging from the carnage of the brutal Iraq-imposed war.

When President Hassan Rouhani took office in mid-2013, inflation was over 34% and the economy was shrinking at a near 6% rate. However, a combination of fiscal discipline and prudent monetary policy led to inflation’s continuous decline in the past three years.

The latest inflation for the 12 months ending Aug. 21 showed an 8.9% rise in consumer prices.

Nonetheless, year-on-year inflation, considered by many as the canary in the mine for average inflation has started rising since it bottomed at 6.8% in the Iranian month of Khordad ending June 20.

It has continuously gone up, hitting 9.4% for the month ending Aug. 21. That means inflation is widely expected to climb in the coming months.