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4.2 Inflation 4.2.1 CPI dynamics
Iran’s CPI inflation in 12 months to Jan 21 falls 1.4pp to 38.6%
Iran’s official consumer price index (CPI) inflation was 38.6% in the 12 months to January 21 (the end of the 10th Persian calendar month, Dey) down from the previous 12-month reading of 40.0% to December 21, according to data released by the Statistical Centre of Iran (SCI).
The latest figure marked the first time in six months that the inflation reading fell below the 40% threshold.
Food and beverage prices in the 12 months to January 21 climbed 52.4%. Some foodstuffs, such as vegetables, herbs and various meats, recorded rises of around 70%.
Iran’s economy has been battered by US sanctions since Donald Trump pulled Washington out of the nuclear deal in May 2018 and switched back to a heavy sanctions regime. The Iranian rial (IRR) has dropped around fourfold against major currencies.
In the January 2020 edition of its Global Economic Prospects report released on January 9, the World Bank estimates that Iranian GDP contracted by as much as 8.7% in 2019, a year that saw the Trump administration gradually introduce tougher and tougher sanctions against Tehran including a drive to squeeze all Iranian oil off world export markets. In the June 2019 edition of the report, the international financial institution only foresaw a contraction of 4.5%.
In further bad news for Iran, while the World Bank six months ago was counting with a resumption of Iranian growth in 2020 to 0.9%, it now sees stagnation of 0.0%. And that figure, it added, “assumes that the impact of sanctions tapers somewhat”. Whether that tapering occurs may well depend on whether US President Donald Trump regards it as in his interests as his campaign to get re-elected in November ramps up.
Iranian GDP in 2018 shrank by 4.9% following growth of 3.8% in 2017.
In a section on fiscal challenges faced by economies, the latest World Bank Global Economic Prospects report noted that Iran is a country where subsidies for products subject to price controls, such as petroleum, amount to a large
16 IRAN Country Report March 2020 www.intellinews.com
