Inflation Reaches 18 Percent, Point-to-Point Inflation at 37.4 Percent

The Statistical Center of Iran announced that the average inflation rate, which compares the inflation rate for the 12 months ending in December of this year to the year ending in December of last year, has increased by 2.4 percent to reach 18 percent. This month, point-to-point inflation also reached 37.4 percent, which is an increase of 2.5 percent compared to the same rate in November. Thus, Iranian households in December of this year spent 37.4 percent more than in November of last year for a similar set of goods and services. According to this report, the price index in the major group of 'food, beverages, and tobacco' increased by 4.8 percent compared to the previous month. This center had reported the average inflation rate in November as 15.4 percent, which shows an increase of 2.2 percentage points compared to the average inflation rate in October. Therefore, the inflation rate not only maintained its upward trend but the pace of inflation increase has even accelerated compared to the previous month. The International Monetary Fund expects inflation in Iran to reach 29.6 percent in 2018, with economic growth projected to be negative 1.5 percent. Steve Hanke, an American economist at Johns Hopkins University, estimated the current inflation rate in Iran's economy to be as high as 117 percent, which is 10 to 12 times higher than the officially announced rate. The reason for this significant discrepancy in the assessment of Iran's inflation rate in this economist's calculations is the use of the exchange rate (dollar) in the unofficial and free market in his calculation model. Meanwhile, according to a recent report from the Research Center of the Parliament, for every 10 percent increase in the price of currency, inflation will increase by 2 percent. According to the Statistical Center of Iran, the average price of one square meter of residential space in urban areas of Iran reached over 2 million and 226 thousand tomans this summer, which represents a 44.4 percent increase compared to last summer. The average price of each square meter of residential space in urban areas of Iran in summer 2018 compared to spring of this year also shows a 14.9 percent increase. The importance coefficient of the housing group in calculating the inflation index is 37.5 percent, which is the highest importance coefficient among other groups in calculating the inflation rate, meaning that changes in the housing and rental price index have the greatest impact on the inflation index.