The Statistical Center of Iran’s latest survey of the country’s 31 provinces shows three provinces registered year-on-year inflation rates of above 60% in the fifth month of the current Iranian year (July 23-August 22).
The overall goods and services Consumer Price Index in Iran saw a year-on-year increase of 52.2%.
The YOY inflation for West Azarbaijan, Ardabil and Kerman provinces were reportedly 60.3% each, the highest among all provinces.
The year-on-year CPI growth was the lowest for Khuzestan Province with 45.8%.
The report also shows Kohgilouyeh-Boyerahmad registered the highest average annual inflation with 47.8% while Sistan-Baluchestan posted the lowest with 36.6%.
At the country level, the average goods and services CPI in Iran for the 12-month period ending Aug. 22 increased by 41.5% compared with the preceding year’s corresponding period.
On a month-on-month basis, the growth in CPI was the highest (7.1%) in Markazi Province, while West Azarbaijan Province posted the lowest (0.6%).
The overall CPI, using the Iranian year to March 2017 as the base year, stood at 514.2 in the month ending Aug. 22, indicating a 2% rise compared with the previous month.
The highest and lowest annualized inflation rates were respectively registered for “hotels and restaurants” with 67.9% and “communications” with 5.3%.
“Hotels and restaurants” with 83.1% and “communications” with 11% saw the highest and lowest YOY inflation respectively.
Urban Households
The overall CPI calculated for urban areas stood at 504.8 during the fifth month of the current Iranian year, indicating a 2% rise compared with the previous month.
The growth in CPI measured for provincial urban households compared with the previous month was highest (3.7%) for Markazi while West Azarbaijan, Bushehr and Zanjan recorded the lowest monthly inflation rate with an increase of 1% compared with other provinces.
The index registered a year-on-year increase of 51.1% for urban areas. Goods and services CPI of Ardabil’s urban areas registered a year-on-year rise of 59.7% during the month under review, the highest among all provinces. The CPI increase in urban areas was the lowest for Khuzestan with 44.9% YOY.
The average CPI in urban areas for the month under review increased by 40.9% compared with the same period of last year. Households living in the urban areas of Mazandaran experienced the highest annual inflation (with 46.6%) while those of Sistan-Baluchestan witnessed the lowest annual inflation (35.7%) among all Iranian provinces.
Rural Households
The overall CPI calculated for rural areas stood at 567.1 in the month under review, which indicates a 1.7% increase compared with the previous month.
The growth in CPI of rural households compared with the previous month was highest for Mazandaran with 3%. This is while rural households living in West Azarbaijan saw a 0.3% decline in the prices of goods and services compared with the month before, the lowest rate compared with other provinces.
The index registered an average year-on-year increase of 58.4% for rural areas in the same month. CPI of Kerman Province’s rural areas registered a YOY increase of 68.1% during the fifth month of the Iranian year, the highest among all provinces, whereas the year-on-year CPI increase was the lowest for Yazd with 49.9%, compared with other provincial rural areas.
The average goods and services CPI of rural areas in the month under review increased by 44.4% year-on-year.
Kohgilouyeh-Boyerahmad registered the highest annual inflation in rural areas (50.7%) while Hamedan posted the lowest annual inflation rate (36.4%).
Tehran Province
The average goods and services CPI in the 12-month period ending Aug. 22 for Tehran Province, wherein lies the capital city, increased by 39.7% compared with the corresponding period of last year.
SCI had put Tehran’s average annual inflation rate for the preceding Iranian month, which ended on July 22, at 38.6%.
The consumer inflation for the month under review registered an increase of 48.8% year-on-year while it was 49.8% in the preceding month.
CPI (using the Iranian year to March 2017 as the base year) of Tehran Province stood at 503.7 in the month ending Aug. 22, indicating a 2.4% rise compared with the month before. Month-on-month consumer inflation was 4.4% for the preceding month.
SCI put Tehran Province’s urban and rural 12-month inflation rates for the month under review at 39.6% and 41.1%, respectively.
CPI registered a year-on-year increase of 48.7% for urban areas and 51.7% for rural areas in the month under review.
The overall CPI reached 503.1 for urban households and 527 for rural households, indicating a month-on-month increase of 2.4% for urban areas and 1.5% for rural areas.
Impact of Import Subsidy Abolition
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 rate of 42,000 rials per dollar, 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 above 300,000 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 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.
