London, 30 Oct – The Iranian inflation rate has risen to 15.9% in October, the Central Bank of Iran reported. They also noted that the inflation rate has soared by 36.9% compared with the same month from 2017.
This announcement came just one week before US sanctions targeting Iran’s international banking and oil export sectors come into force.
Some economists are even warning about a hyperinflation that would rise up to 65%, something that economy minister Farhad Dejpasand also spoke of on Saturday.
President Hassan Rouhani dismissed this, branding the economists “liars”, during the same session that Dejpasand attended, forcing the economy minister to try to “correct” himself.
The term “hyperinflation” was widely used by the Iranian press after Professor Steve Hanke of Johns Hopkins University used the word earlier this year, when he advised that the annual inflation rate in Iran was then at 151%; a figure that he says has grown to 250% today.
Inflation is dangerous as the economic uncertainty can easily spark mass protests, as we’ve seen earlier this year in Iran, especially considering the still-volatile feeling in Iran.
However, let look again at the official stats. The rate of inflation in Iran grew from 11.5% in August to 13.5% in September, to 15.9% in October, while the point to point inflation rate rose from 31.4% in September to 36.9% in October.
Hanke has stated that Iran’s actual inflation rate is 10 to 12 times higher than the official rates announced by Iranian government institutions. Why is there this difference?
Well the main reason is that Hanke is using the official global exchange rate of 200,000 rials to the US dollar to make his comparisons, whereas Iran is using their artificially set exchange rate of 42,000 rials to the dollar. Even according to the Iranian Parliament’s research centre, a 10% rise in the rial-dollar exchange rate will add 2% to the inflation rate, which means that if they are working from different exchange rates, they will get different levels of inflation.
Iran is also only comparing a select group of goods, rather than the whole economy.
Mohammad Gholi Yousefi, professor of economics at Allameh Tabataba’i University, said: “Hanke’s statistics are more accurate, because most of the goods in Iran are imported from abroad and are therefore influenced by the exchange rate.
Exchange rates even affect non-commercial goods such as taxi fares. Therefore, the exchange rate index is more accurate to assess the inflation rate.”