Page 18 - IRANRptMay21

4.2 Inflation 4.2.1 CPI dynamics
PAST TRENDS: Iran’s economy has been devastated—but not defeated—by the swingeing Donald Trump sanctions brought in from mid-2018, plunging the country into three years of bitter recession. What happens next with just about all economic indicators, including inflation, will depend on whether Tehran can reach an accommodation, via a revival of the 2015 nuclear deal, with the Joe Biden administration. Inflation has raged in Iran since Trump launched his “maximum pressure” campaign—consumer prices in 2019 rose 41% and were on course to grow 30.5% in 2020, according to IMF estimates—with wide discrepancies between different product bands. Any assessment of the pricing picture must take into account extensive grey and black market activities.
CURRENT TRENDS: The IMF says the official annual Iranian inflation rate now stands at 46.2% (compared with less than 10% at the point in May 2018 that Trump quit the nuclear deal). Food and drink price growth is alarming to many Iranians, with complaints cited by UPI lately 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.
In mid-February, pensioners and retired government employees protested in more than a dozen cities across Iran to complain over their financial situation and their state pension, which they said is insufficient to cover the rising cost of living, RFE/RL’s Radio Farda reported. They demanded an increase in their pensions, which they said leave them stranded below the poverty line. Similar protests were held in December and January. During those demonstrations, pensioners called for a 50% increase in their pensions.
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.
18 IRAN Country Report May 2021 www.intellinews.com