Despite haphazard state measures, such as injecting dollars into the foreign exchange market and selling gold on the stock market, inflation soars and the rial maintains a downward trend.
The point-to-point inflation rate reported by the Statistical Center of Iran (SCI) for the last Iranian month, ending Jan. 20, has exceeded 50 percent, with food inflation averaging more than 70 percent. hundred.
The SCI placed general inflation at 51 percent, considering 12 groups of goods and services. The highest jump was registered in the hotel and restaurant sector with 78.5 percent, followed by food.
The SCI announced that food inflation exceeded 70 percent, considering the increase in the prices of bread and cereals, red meat, dairy products, fruits, etc. Inflation for edible oils and fats was in the order of 248 percent compared to the corresponding period of the previous year Most of the increase was due to the removal by the government of subsidies for essential goods, including in the supply chain supply in the form of cheap dollars for importers. The lowest inflation in the food group was registered in tea, coffee, cocoa, soft drinks and fruit juices with an average of 32 percent.
Medicines and health services registered an increase of 54 percent followed by price increases for transportation and clothing with 46.9 and 45.7, respectively.
The figures indicated a slower price rise as food inflation even reached 100 percent in some provinces in previous months. Most of the price increases have occurred since early May when the government removed a food import subsidy to save about $15 billion annually. The move immediately triggered a massive increase in the prices of staple foods such as bread, dairy products, cooking oil and meat. Although the government has repeatedly said that its oil exports are rising steadily despite US sanctions, economic conditions continue to deteriorate, with Iran’s battered currency, the rial, hitting record lows In recent months.
The government has taken a series of measures in recent months to curb inflation and control the free fall of the rial. That replaced the governor of the central bank about a month ago, and has continued to pump dollars into the market to balance demand. On Tuesday, it began offering gold coins on the stock market and also launched a system of nominally fixed exchange rates for its plummeting currency, which has lost at least 50 percent of its value since mid-2021.
On Tuesday, one dollar was exchanged for more than 440,000 riyals per US dollar, recovering from a low of 450,000 in recent days.
The government started selling gold on the stock market in the form of securities. Under the plan, people can buy up to five gold coins weighing about two grams each (called quarter gold coins in Iran, since a full gold coin is about eight grams) at current prices, but they only receive a document for their purchase and will have to wait until the government announces the date they will be able to receive their coins. People tend to rush such government schemes because by the time they get their coins, the price will be higher as the rial falls, and they can make a small profit. In this way, the government obtains large amounts of money and only gives people a few certificates for their purchase. The government plans to sell 450,000 of these two-gram coins on the stock market in the next 10 days. This will equal almost a ton of gold.
Also, this week, the government injected $305 million into the forex market for two days, after the rial fell to a record low of 450,000 against the US dollar.
Earlier in the week, Parliament approved the guidelines of the budget bill for the next Iranian year, starting March 21, without considering their unrealistic assumptions. The deficit in the current budget that the government admits is about 4,760 trillion riyals, more than ten billion dollars. But the actual deficit will perhaps double, with optimistic estimates for oil sales and staggering tax collections.