Stubborn Inflation Against Further Decline

The Central Bank's report on inflation index changes in the month of Dey indicates that for the third consecutive month, the downward trend of this rate has stopped, and the average inflation rate has stabilized. According to the Central Bank's report on changes in the consumer goods and services price index for Dey this year, the average inflation rate, or the 12-month inflation rate ending in Dey 1395, was announced as 8.6 percent, a figure similar to the average inflation rate in Aban and Azar this year, indicating that the 12-month inflation rate has not been able to continue the downward trend of previous months in the past three months. The stabilization of the average inflation rate in the Central Bank's report coincides with an increase in the point-to-point inflation rate, which doubles the concern about the future trend of inflation index changes. The point-to-point inflation rate, which is considered a leading indicator and shows the future trend of inflation index changes, increased to 9.6 percent in Dey this year, which is a 0.4 percentage point increase compared to the point-to-point inflation rate of Azar. However, the report from the Statistical Center of Iran regarding inflation changes in Dey this year still showed a continued decrease in the inflation rate, with the average inflation rate for this month reaching 6.9 percent, which is 0.3 percentage points lower than the rate in Azar. Nevertheless, the point-to-point inflation rate in Dey in the Statistical Center's report increased by 0.6 percentage points to 6.3 percent. The monthly inflation rate was reported as 0.8 percent, which remained stable compared to the monthly inflation rate of Azar. An examination of the price index changes of major groups in the Central Bank's report indicates that the highest point-to-point inflation rate among major groups, as in previous months, belonged to the 'Health and Treatment' group, which experienced an inflation rate of 17.2 percent this month. The 'Education' group with an inflation rate of 11.3 percent and the 'Tobacco' group with an inflation rate of 10.7 percent ranked next in the highest inflation rates among major groups. The report from the Statistical Center of Iran on inflation index changes in Dey 1395 and the examination of the details of group inflation rates show many similarities with the Central Bank's report. The highest inflation rate among the main and sub-groups examined by the Statistical Center of Iran also belonged to the 'Education' group, which recorded an inflation rate of 13.3 percent. Following this group, the price index of the 'Tobacco' group with a growth of 10.2 percent ranked second in the highest inflation rate among main and sub-groups. The 'Health and Treatment' group was also among the commodity and service groups in Dey that ranked among the highest inflation rates with a growth of 9.5 percent. Among the commodity groups whose changes are noted in periodic reports, the 'Food and Beverages' group is significant due to its importance for the general public and its high weight in the calculations for determining the inflation rate, making it essential to pay attention to the changes in the price index of this group. The price index of the 'Food and Beverages' group in Dey, according to the Central Bank's report, was 9.8 percent, while the price index of this group in the Statistical Center's report was recorded at 6.9 percent. An examination of the price changes of the selected commodity basket by Radio Farda, which includes 10 commonly used items in Iranian households, also shows that the average price of these items in Dey this year decreased by 2.5 percent compared to the previous month of Azar. The most significant positive price change was for potatoes, which increased by 3.5 percent, while the most significant price decrease was for tomatoes, which became over 26 percent cheaper within this month. Changing the comparison base of price changes for this commodity basket from Azar 1395 to Dey 1394 yields completely altered results, showing that the average price of this commodity basket increased by 8.25 percent from Dey last year to Dey this year. Among these ten items, domestic high-quality rice recorded the highest price increase of 49 percent, while onions saw a price decrease of about 44 percent during this period. The examination of inflation index changes in Dey was significant because this month saw the most severe price fluctuations in the free currency market in the past three years, with the dollar price fluctuating above four thousand tomans due to domestic and international factors. It seems that the fluctuations in the free currency market have not had a significant and observable effect on the inflation index, especially in the food and beverage market. The impact of the rising dollar and other currencies on the prices of imported goods, whether consumer or intermediary goods and machinery, can affect the final prices of some goods with a delay, but it appears that the psychological impact of rising prices in the currency market did not leave a noticeable trace on the inflation index for Dey. However, inflation and its declining trend face serious challenges, including the increase in government debt to banks, the continuous growth of liquidity, and the government's efforts to stimulate Iran's economy while embracing higher growth rates, all of which can lead to an increase in the inflation rate and a rise in the general price level. On the other hand, the increase in the point-to-point inflation rate and its proximity to double digits, along with the monthly inflation rate slightly below one percent, are concerning and risky signs for the government's inflation achievements in the remaining two months of this year. Especially since the final months of the year, considering the intensified financial circulation and accelerated transactions, as well as increased demand for the New Year, can lead to developments that increase the inflation rate.