Iran's Statistical Center Reports Inflation Rate of Approximately 27% for 2018

On Thursday, March 21, the Statistical Center of Iran reported that the average inflation rate for the year 1397 (2018) reached 26.9% by the end of Esfand (March 2019), marking the highest inflation rate in the past five years. According to the report on changes in the consumer price index, the inflation rate at the end of 1396 (2017) was reported at 8.2%, indicating that the government's achievement of single-digit inflation by the end of 1396 has been lost. From 1392 (2013), when the average inflation rate was reported at 32.8%, the announced inflation rate remained below 20% until 1397, with average single-digit inflation in 1395 and 1396. The Statistical Center of Iran also reported a point-to-point inflation rate of 47.5% in Esfand 1397, meaning that each household in Iran spent on average 47.5% more for a 'set of identical goods and services' in Esfand 1397 compared to Esfand 1396. The point-to-point inflation rate for Bahman (February) 1397 was reported at 42.3%. The results of this report indicate that the monthly inflation rate in Esfand was 3.9%, reflecting an increase in the general price level from Bahman to Esfand, while the monthly inflation rate in Bahman was reported at 2.2%. A notable point in the report is the inflation rate for the 'food and beverages' group, which experienced a 73.2% increase in Esfand 1397 compared to Esfand 1396. The highest inflation rate among groups and commodity classes was attributed to 'tobacco,' which saw a price index increase of 125% in Esfand 1397 compared to Esfand 1396. Following tobacco, the highest point-to-point inflation rate was for the 'furniture and household appliances and their regular maintenance' group, which increased by 78.3% in Esfand 1397 compared to the same month the previous year. Another noteworthy aspect of the report is that the average inflation rate in rural areas was higher than that for urban households. The average rural inflation rate for 1397 was reported at 28.1%, while the urban inflation rate for the past year was 26.6%, lower than the national average inflation index. The significant increase in inflation at the end of the previous year comes as President Hassan Rouhani, in his Nowruz message, declared 1398 (2019) as the year of 'controlling inflation' and 'stabilizing currency prices.' In 1397, the disruption of the currency market and unprecedented price increases in the free currency market led to a rising trend in the prices of various goods and services. Experts attribute government and bank debts to the central bank, as well as financing budget deficits from central bank resources, as factors contributing to inflation in Iran's economic structure. It is anticipated that the government will face budget deficit issues in 1398 as well, and if the method of covering this deficit involves borrowing from the central bank and utilizing its resources, it could potentially lead to an even higher inflation rate.