Iran in­fla­tion rises on ‘psy­cho­log­i­cal’ im­pact

The Pak Banker - - Company& -

THERAN: Iran's of­fi­cial in­fla­tion rate rose for the third month run­ning, the cen­tral bank chief said on Satur­day, re­flect­ing the govern­ment's move to slash sub­si­dies in an econ­omy un­der pres­sure from in­ter­na­tional sanc­tions.

At 9.7 per cent, in­fla­tion is still well be­low the near-30 per cent of two years ago, but it has crept up from a 25-year-low of 8.8 per cent in Au­gust and many Ira­ni­ans com­plain that prices are ris­ing much faster in re­al­ity.

Cen­tral Bank Gover­nor Mah­moud Bahmani told state ra­dio the rise was due to the 'psy­cho­log­i­cal at­mos­phere' and that curbs on price hikes would stem the up­ward trend.

"Be­cause the govern­ment has pre­vented an in­crease in the price of most goods we should ex­pect a de­crease in the in­fla­tion rate in fu­ture months," he said. "All ef­forts of the govern­ment and the cen­tral bank are to keep the in­fla­tion rate in sin­gle dig­its." A pos­si­ble surge in in­fla­tion is the biggest risk of what Pres­i­dent Mah­moud Ah­madine­jad has called 'the biggest eco­nomic plan in the past 50 years' --the phas­ing out of the $100 bil­lion per year the state cur­rently pays to keep down prices of es­sen­tials like food and fuel.

Some Ira­ni­ans have al­ready seen elec­tric­ity bills rise as much as ten-fold over the last two months and mo­torists are brac­ing for a sim­i­lar hit in the com­ing weeks or months when gaso­line sub­si­dies are slashed.

Widely seen as a nec­es­sary step to re­duc­ing waste­ful con­sump­tion of valu­able re­sources, the sub­sidy re­form has been un­der con­sid­er­a­tion for many years. The Oil Min­istry's news web­site Shana re­ported on Satur­day that the govern­ment had banned ex­ports of petro­chem­i­cal prod­ucts for which there was out­stand­ing do­mes­tic de­mand. -PB News

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