Food Inflation Rate Decreases from 38.7% to 8.6%

The average inflation rate, as reported by the Central Bank recently, reached 8.6% in the year ending in November this year, while the Iranian Statistics Center reported it at 7.5%. The 12-month inflation rate in November 2013, just a few months into the eleventh government, was 40%. Comparing the two inflation rates in November this year to the same month in 1392 shows a decrease of 31.4 percentage points in the average inflation rate over these three years. An examination of the point-to-point inflation rates of the main groups analyzed in the Central Bank's report during these two time periods reveals which of these main groups experienced the most and least decrease or possibly increase. An analysis of the changes in the price index of the two 'specific groups' which include 'goods' and 'services' indicates that the majority of the inflation decrease occurred in the price index of the specific goods group, which increased from a growth rate of 37.2% in November 2013 to a rate of 7.4% this November, reflecting an over 80% decrease in the acceleration of this index's growth rate. The price index of the specific 'services' group, although it has seen a decrease, has not followed the same trend as the decline in the price index of the specific 'goods' group. The price index of the specific 'services' group decreased from 24.6% in November 2013 to 11.3% this November, showing a 54% decline in the acceleration of this index's growth. Among the 12 main groups in the Central Bank's report on inflation rate changes, only the price index of the main 'education' group has increased from 9.7% in November 2013 to 11.4% this November. The most significant percentage decrease in the acceleration of the price index was in the 'communications' group, where the growth rate dropped from 6% in November 2013 to just 0.1% this November, a decline of 98.3%. Following this group, the next largest decrease was in the main 'furniture, household items, and services' group, which adjusted from a growth rate of 42.5% in November three years ago to 5.2% this November. The price index for the main 'clothing and footwear' group showed a 44% increase three years ago, which followed a growth rate of 6.1% this November, indicating an 86% decrease in the acceleration of price increases for this group. Meanwhile, in November this year, the highest point-to-point inflation rate was related to the price index of the main 'health and medical' group, which increased by 17.2%. After this group, the highest inflation rate was for the main 'education' group, which increased by 11.4% this month. Among the most important main groups in the Central Bank's reports on inflation rate trends is the main 'food and beverages' group. Since the price changes in this group relate to basic human needs, they can significantly affect household living standards. The price index for this group grew at a rate of 38.7% in November 2013, which decreased to less than 9% this November, thus adjusting the acceleration of the price index for the main 'food and beverages' group by 77% during these two time periods. The monthly growth rate of this group's index compared to the previous month, which was Mehr 1395, was zero, indicating price stability in the food and beverage market this autumn. An examination of the price changes in the selected goods basket by Radio Farda, which includes 10 commonly consumed items by Iranian households, shows that the average price of the items in this basket increased by 7.3% in November this year compared to the previous month. The highest price increase was for 'tomatoes', which grew by over 66% in these two months. The largest price decrease among these 10 items was for 'domestic grade one rice', which decreased by over 1% from Mehr to Aban 1395. Details of the price changes for these items from Mehr to Aban 1395 can be seen in Table 1. Changing the basis of comparison for the price changes of these items from Mehr 1395 to Aban 1394 indicates the point-to-point inflation of these items. The average price changes in this basket in Aban 1395 compared to the same month last year was approximately 11.5%, with the highest price increase being close to 48% for domestic grade one rice, and the largest price decrease being around 17% for onions. An examination of the price change trends in Iran over recent months, particularly the movements of the monthly inflation rate and point-to-point inflation rate, reinforces the likelihood that the downward trend in the average inflation rate will continue in the remaining months of the current solar year. However, at the same time, the government's and Central Bank's efforts to provide the necessary monetary resources for economic enterprises and the nearly 30% growth in liquidity raise concerns that the inflation rate may change direction and increase again as economic activities become smoother.