Iran's inflation rate breaks 24-year record
Iran's 12-month inflation reached 40.4 percent in July 2019. This is the highest annual inflation figure in the last 24 years. Headline inflation, which shows the increase in prices compared to the same time last year, has also reached 48 percent.
Headline inflation shows more rapid price increases and compares the prices of goods with the same time last year. While 12-month inflation shows the average price increase over the past 12 months. In the current situation in Iran, headline inflation can better reflect the critical conditions of the economy.
The Statistical Center of Iran's report on the prices of goods and services in Iran shows that the price increase trend in July has slowed down slightly compared to previous months. Headline inflation was above 50 percent in June. However, inflation continues at an unprecedented pace.
The chart below compares the trend of rising inflation in Iran during the sanctions era of President Mahmoud Ahmadinejad with recent months. Inflation in Iran has risen to record levels since the US withdrew from the nuclear deal.
If we consider 12-month inflation, which shows the increase in prices over a one-year period, the July 2019 inflation is the highest since 1995.
Food prices
According to estimates by the Statistical Center of Iran, about a quarter of Iranian households' spending is spent on food and beverages. Food has become more expensive than other goods in the recent wave of inflation, doubling on average compared to last year.
The image below shows the explosive growth in the price of food items in the last year. Overall, fruits and vegetables, and red and white meat have become more expensive than other goods. Meat has become more expensive than other food items, with a price increase of about 95 percent.
In recent years, the rise in the dollar has had a direct impact on inflation and Iran's economic conditions. The dollar has a direct impact, especially on food products that require imports for production.
The Iranian market has witnessed a downward trend in the dollar price over the past three weeks. The dollar started July at a price above 13,000 Tomans, and as it continued its downward trend, it fell below 12,000 Tomans last week, without reacting to Iran's foreign policy tensions, especially the conflicts in the Persian Gulf region.
However, the approximately 77% decrease in Iranian oil sales compared to last year and US financial sanctions call into question the government's financial ability to provide the foreign exchange needed by the domestic market in the coming months.
Source: Radio Farda
