Inflation Rate Approaches Single Digits

Reports from the Central Bank and the Statistical Center of Iran indicate that the average inflation rate in Ordibehesht 1395 (May 2016) is on the verge of becoming single-digit. The Central Bank announced in a report that the average inflation rate in Ordibehesht this year has reached 10.4%, which is 0.8 percentage points lower than the average inflation rate in Farvardin (April). The average inflation rate in Ordibehesht 1395 reported by the Statistical Center of Iran for urban areas was also announced as 10.2%, which is a decrease of 0.6 percentage points compared to the average inflation rate in Farvardin this year. The point-to-point inflation rate for Ordibehesht, according to the Central Bank's report, is 7.3%, while the Statistical Center of Iran reported it as 6.8%. In both statistical reports, the trend of decreasing inflation has been maintained, strengthening hopes that next month, just before summer, Iran's economy will witness a single-digit average inflation rate. Previously, Valiollah Seif, the Governor of the Central Bank of Iran, had predicted that this summer, after 25 years, the average inflation rate would become single-digit. An analysis of the inflation rates of specific groups in the Central Bank's report shows that the services sector, with an inflation rate of 12.7%, has been the main contributor to inflation, while the inflation rate for the goods sector in Ordibehesht was only 3.7%. Although the eleventh government has been successful in controlling inflation, it has not achieved significant success in reducing unemployment or revitalizing Iran's economy. The inflation rate when Hassan Rouhani took office was over 40%, and now, after three years, this rate has decreased to just over 10%. Iran's economic growth rate, which was -6.8% and -1.9% in 1391 and 1392 respectively, increased to 3% in 1393, but due to falling oil prices and delays in resolving issues stemming from sanctions and internal economic problems, Iran's economic growth rate fell to 1% in 1394, which was below expectations. Some economic experts attribute the slowdown in inflation and the possibility of it becoming single-digit to the prevailing recession in Iran's economy, which has eroded economic capacity and people's purchasing power, leading to a decline in demand and falling prices. In contrast, government officials and experts supporting the government's economic policies view the slowdown in inflation as a result of the government's monetary and fiscal discipline and deliberate policies to reduce inflation as the first step in economic reforms.