Iran’s Central Bank Claims Inflation Is 46.5% Despite Higher Estimates

The Central Bank of Iran announced Sunday the annual inflation rate stands at 46.5 percent but did not mention the point-to-point inflation of the last month of the Iranian year. 

Although the official inflation rate announced by the authorities is usually less than what it seems in the market, even a 46.5-percent inflation is among the highest in Iran in more than 30 years. 

The bank did not disclose the point-to-point inflation for the last Iranian calendar month, which ended on March 21, but it provided the price index of the month, from which the inflation can be extracted. The price index for the month was 794.3, which means a 64-percent point-to-point inflation rate compared to the corresponding period of the previous year at 484.6. It is the second time Iran recorded such a figure since World War II. 

The latest CBI report also lacks the price index changes of different groups of goods and services, unlike the usual procedure. Moreover, the Statistical Center of Iran (SCI) has not published its inflation report for the past month. SCI has been the only government entity regularly announcing the inflation rate in the past four years.

SCI said on Sunday that the reason behind the delay is the process of changing the “base year” from the year 1395 to 1400, which ended on March 20, 2022. A base year is used for comparison in the measure of a business activity or economic or financial index. It can also describe the starting point from a point of growth or a baseline for calculating financial transactions. 

"Due to the changes in the content of the market basket over time, according to international recommendations, it is necessary to change the base year at certain time intervals,” the Statistical Center of Iran said. 

Considering the devaluation of Iran’s currency rial from 260,000 against one dollar to about 500,000 this month, the inflation rate is expected to hit new highs in coming months.

The inflation rate factors in numerous commodities and services but the one most important for Iranians is increasing food prices, with some categories doubling or tripling in the past 12 months. Official figures show there was a sharp increase in food prices and most items witnessed a more-than 50 price inflation.

The Islamic Republic has been struggling with high inflation since 2019, but the raging inflation in the past Iranian year which ends on March 20, was seriously different from previous years. Last May, the government eliminated an annual food import subsidy of at least $10 billion, which immediately led to steep price increases. 

This was followed by a fall in the value of the national currency, making imports more expensive for the population. The government called its decision to scrap the food subsidy “economic surgery,” but it had no other plans to control prices. Immediately following the announcement, food prices jumped, with some items doubling or tripling in a matter of hours. Pasta is 137 percent more expensive than 12 months ago, while meat prices went up by 76 percent and milk by 80 percent. According to SCI, in some months the inflation rate for food and beverages hit 87%.

In his New Year speech on March 21, Supreme Leader Ali Khamenei dubbed the new year as “the year of bringing inflation under control”, a promise also repeated by President Ebrahim Raisi, but reminiscent of similar slogans in previous years.