Page 21 - IRANRptNov21

Inflation in Iran to grow 30.5% in 2020, says IMF
middle-class Iranians hammered by the impacts of coronavirus (COVID-19) shutdowns and US sanctions. SCI reported that the fastest inflation hikes occurred with food and beverages and tobacco, especially given price rises of vegetables, dairy products, eggs and bread.
OUTLOOK: There are signs that Iran is pulling out of recession, but for quick progress—and a big alleviation in inflation—the Islamic Republic needs a deal that will see US sanctions scrapped. Tehran, having put up painful economic resistance to Trump, will not want to lose face in agreeing one, though.
The Central Bank of Iran (CBI) does not use a benchmark interest rate. Instead, it sets bank profit rates for lending and borrowing. In FX, there are fixed official rates and the more realistic floating free market rates. Official lending of USD and other hard currencies is restricted to approved recipients such as traders bringing in key imports.
Iranian consumer prices in 2019 rose 41% and were on course to grow 30.5% in 2020 and 30% in 2021, the IMF said. However, the official annual inflation rate increased to 47.6% in June 2021 from 46.9% in the previous month due to rising food prices. Price growth is very unevenly spread among the various goods and services categories. Food and drink price growth is alarming to many Iranians, with complaints cited by UPI that chicken, rice and egg prices have nearly doubled over the past year while fresh fruit, beans and vegetable oil prices have increased by around threefold.
4.2.2 PPI dynamics
Iran’s ‘Shamekh’ PMI back in positive territory
Iran’s purchasing managers’ index (PMI), known by its Persian acronym Shamekh, moved up to 55.55 in the seventh Persian calendar month (Shahrivar, running from August 23–September 22), Iran Chamber announced on October 11.
The Statistics and Economic Analysis Centre of Iran Chamber of Commerce, Industries, Mines and Agriculture—the sponsor and coordinator of the survey—said that despite an uptick in industrial production, strong inflationary pressures were still a stress on manufacturing in the country, with wholesale prices of goods and materials increasing sharply due to the rigid devaluation of the rial (IRR) under US sanctions and supply chain shortages in the global economy.
The PMI sub-index for “business activities” rallied to 57.64 in the latest concluded Persian month, the highest recorded for four months. It previously
21 IRAN Country Report November 2021 www.intellinews.com