Official inflation rate in 1400 announced at over 40 percent; third highest inflation rate in Islamic Republic history
Iran’s Statistics Center says the annual inflation rate reached 40.2 percent in Esfand 1400.
This is the third time in the history of the Islamic Republic that an annual inflation rate above 40 percent has been recorded in the country. Previously, in the years 74 and 98, the inflation rate had exceeded 40 percent.
The inflation rate for the year 1399 had been announced at approximately 36.4 percent.
The announcement of inflation rates by Iran’s statistical agencies has always been met with skepticism from independent experts and economists, who consistently point out that the actual inflation rate is higher than official figures.
Details of the Statistics Center’s report show that food prices in the 12-month period of last year increased by nearly 52 percent compared to the same period in 1399, while other items, such as services and housing, showed smaller increases.
However, the report states that housing prices and rental costs in Esfand of last year increased by only 27 percent compared to the same month in 1399, while data from the Central Bank and domestic media research shows that housing prices and rentals, at least in Tehran, are at least double the figure claimed by the Statistics Center.
Details of the Statistics Center’s report also show that price increases in rural areas were greater than in urban areas.
The spike in inflation to above 40 percent comes at a time when in the previous solar year, both the volume of oil exports and its price nearly doubled, and the country’s non-oil exports also experienced growth of over 40 percent.
Despite the multi-fold increase in foreign currency revenues, the average dollar price in Iran’s free market during 1400 was around 26,000 tomans, which is 13 percent higher than 1399.
Since Farvardin 1397, when preferential currency allocation of 4,200 tomans for imports of essential goods was implemented, approximately 71 billion dollars in government foreign currency has been handed over to goods importers, and despite this amount of government currency allocation, the price index has risen from below 113 in Farvardin 97 to above 401 in Esfand of last year.
Such a massive jump in the price index comes as the government seeks to stop allocating the 4,200 toman currency for essential goods in the current solar year; a matter that will accelerate inflation growth.
In this regard, the IRNA news agency announced in a report on 27 Esfand that the impact of the 4,200 toman currency on inflation reduction was “minimal” and that preferential currency has led to corruption and bribery.
The government does not explain why, instead of fighting corruption and bribery, it sees the solution in eliminating the 4,200 toman currency and how it intends to control the inflationary consequences; however, some government officials had previously announced that instead of the 4,200 toman currency, household subsidies would increase.
Increasing subsidies itself is a factor in increasing liquidity and further accelerating the inflation rate and, on the other hand, the depreciation of the rial.
Liquidity in Iran has surged from approximately 1,537 trillion tomans at the beginning of 1397 to 4,501 trillion tomans in Dey of last year, according to the latest Central Bank figures; in other words, it has tripled in less than four years.
Such a level of liquidity growth has fueled runaway inflation in the country.
Over the past four years, the dollar rate has soared from below five thousand tomans to above 26 thousand tomans and even exceeded 30 thousand tomans at some points. Overall, the Iranian rial has lost 80 percent of its value during this period.
Source: Radio Farda
