September 23, 2022
The rate of inflation slipped a little last month but the only months when inflation was ever higher than last month were the two months immediately before it.
According to the Statistical Center of Iran, annual inflation in the month of Mordad, ending August 22, stood at 52.2 percent, compared with same month last year, the measurement most watched. The only higher rates were 54.0 percent in the month before Mordad and 52.5 percent two months before Mordad.
So, while inflation moderated last month, it wasn’t by much and certainly provided no ground for the Raisi Administration to boast and it didn’t try.
By the other inflation measurement the average of the previous 12 months inflation actually worsened in Mordad. It hit 41.5 percent, up from 40.5 percent the month before and 39.4 percent two months before.
Most worrying for the government was that the food and beverage part of the measurement in Mordad rose 81.2 percent compared to the same month last year. The change in food costs is the area that families see first and that tends to drive attitudes and fears.
Djavad Salehi-Isfahani, an economist at Virginia Tech University, cautions that things are not as bad as these numbers would make it appear. He notes that in the year ending at Now Ruz, incomes rose by 51 percent, according to SCI data. So, he writes, “Living standards are not rapidly deteriorating, as media chatter would like us to believe.”
He continued, “Many well-meaning critics think that living standards have been falling continuously because prices have been rising fast. This is the widely-shared but mistaken belief that every price increase is a decline in purchasing power. What this thinking ignores is that wages are also prices and rise with inflation, not always for everyone in tandem, but they rise.”
Iran International, however, took a different approach and suggested the inflation is further impoverishing the poor. It noted that the poorest 20 percent of the population spends more than 40 percent of their income on food, while the richest 10 percent spends only 17 percent on food, thus making the immense rate of inflation in the food category devastating for the poor.
The recent spike in inflation began after the government ended subsidies on food and medicine imports in May.
Iran remains an outlier, however, when it comes to inflation. As of a few months ago, only six countries had inflation rates higher than Iran: Venezuela, with annual inflation above 1,000 percent; Sudan, Lebanon and Syria with inflation topping 100 percent; Surinam at 63 percent and Zimbabwe at 61 percent.
