Good news for Iran from the inflation front
Good economic news greets President Rouhani as he arrives in New York for the UN General Assembly this week: a declining trend of inflation. According to the latest consumer price index data published by the Statistical Center of Iran, during the Iranian month of Shahrivar (August 21-September20, 2019) inflation reached its lowest level since Trump’s assault on Iran’s economy began 18 months ago: the CPI increased at an annual rate of just 6.1 percent. When Trump reimposed sanctions in May 2018, inflation was quite low: 2.7 percent annually in March 2018 and rose to 126.7 percent in October. It has declined more or less continuously from that peak since (see graph of the 3-month moving average below). (more…)
Is Iran’s inflation rising?
The most recent report on consumer prices (link in Persian) published by the Statistical Center of Iran (SCI) last week shows that prices rose faster in Tir 1398 (June 21 to July 20, 2019) than they did in the preceding two months. Low inflation rates during Ordibehesht (roughly, May) and Khordad (June), 19 percent and 10 percent (measured annually), seemed to signal that the cost push inflation of 2018 may be working its way out of the system. But, the sharp increase in Tir prices, 38 percent annually, three times as fast as the previous month, may suggest otherwise. The dollar in the free market responded quickly, jumping above 120,000 rials per dollar. (more…)
Fact checking the meat consumption of Iranians
The rapid increase in the price of meat in the last few months has turned this food item of dubious health value into the lightning rod for the suffering of Iranian consumers. Viewers of the BBC Persian program may recall a stark graphic that purported to show that the amount of red meat that a minimum wage worker could buy has declined from 74 kg per month in 1357 (1978) to 10 kg in 1397 (2018). (more…)
A note on measuring living standards
A few weeks ago, in this blog and in opinion pieces (here, here and here), I argued that during the three decades since the end of the war with Iraq (1988), Iran’s economic growth exceeded that of Turkey, such that by 2012, when US sanctions intensified, living standards in the two countries were very similar. My analysis, which surprised some and angered others, is because of the particular data I used to measure GDP per capita (which I also refer to as the living standard). GDP comparison is not rocket science but most journalists (and even many economists) often get it wrong. So, in this post I try to explain why it is important that we use data specifically intended for such comparisons.
Rouhani’s new budget cuts back on expenditures, big time
If the government of Hassan Rouhani has a plan for fighting the downward trend in Iran’s economy, the one started with the US withdrawal from the nuclear deal, it is not to be found in its proposed budget for the Iranian year 1398 (March 21, 2019 to March 20, 2020). The budget, which may be modified by Iran’s parliament in the next few weeks, is proposing serious cuts to expenditures. Blaming shrinking revenues from oil, the government has decided to deal with the shock of the Trump sanctions and fleeing private investment by reducing its own expenditures. Not a surprise from a government that has made fighting inflation its top priority and jobs creation the purview of the private sector. This is reasonable logic in normal time, but not when factories are cutting back on production and employment or shutting down altogether. (more…)
Is Iran’s inflation really slowing?
In my last blog post I suggested that Iran’s inflation may be slowing down, and the latest consumer price data from the Statistical Center of Iran (SCI) suggest that this may indeed be the case. The Consumer Price Index (CPI) published by SCI rose by 2.6 percent for the month of Azar (November 21 to December 20), an annual rate of increase of 26 percent. This is high by world standards but low by the standards of this summer, when in August the rate shot up to 127 percent (see Figure 1). More importantly, it is about the same as the month before, which is why it is safe to say that calmer — not better — times are ahead. Unfortunately, the reporting of prices has created confusion, some numbers showing inflation slowing while headlines say the opposite. (more…)
The return of inflation
According to the Central Bank of Iran, last month (Iranian month of Khordad, which ended on June 20, 2018), consumer prices increased by 4.3 percent. This translates into a whopping annual inflation rate of 67 percent. The government announcement was much less alarming, using the so-called point-to-point inflation rate (Khordad 2018 over the same month 2017) of 9.4 percent. As I explained in a recent interview in Tejarat Farda (in Persian), the point-to-point reporting is very misleading when inflation is accelerating, and does not fool anyone (any more than I could fool a police officer whose radar registered my speed at 80 miles per hour by claiming that my average speed since leaving home has been below the speed limit). (more…)
Understanding the rial’s strength
Last month a headline (link in Persian) in Eghtesad News read: “Do not buy dollars, it will get cheaper”! More surprising than the headline was who said it: Iran’s Central Bank Governor, Valliollah Seif. As his critics were quick to point out, it was unwise for the one official whose economic predictions should be muted and very general — the US Fed’s statements about the future need expert decoding — to claim to know which way the exchange rate will move in the future (you can read here — in Persian — the CBI’s lengthy explanation for the controversial remarks). (more…)
Getting the facts right on Iran’s economic growth
A post on Iran’s GDP may seem very wonkish, but it is actually very relevant to two important political debates. One is the current debate in the US about Iran’s economic prospects and the other is the never ending debate in Iran about the economic cost of the Islamic Revolution of 1979. Neither seem to be well informed with the facts. (more…)
Reporting of economic data in Iran: an old rivalry resurfaces
It is a good sign that people in Iran are paying increasing attention to the accuracy of government data. Before this they used to dismiss all data, especially inflation, as propaganda (see my previous posts on inflation here and here). The fact that an announcement about which government agency is authorized to release economic statistics became news last week is a sign that more people take such data seriously, as they should.
Tyranny of numbers 
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