Surging consumer prices spark concern in Iran

23 Apr, 2007

With the world's eyes focused on its nuclear programme, economists and lawmakers have sounded alarm bells over inflation in Iran after a conspicuous surge in prices in recent months.
A combination of expansionary economic policies, US pressure on the banking system and high money supply growth is fuelling price rises in staple goods in the Islamic republic and hitting the lowest classes hardest.
The research centre run by the conservative-dominated parliament announced last week that inflation reached 22.4 percent in the last Iranian year that ended on March 20, well above the official estimate of 13.5 percent.
A group of 20 lawmakers then published an open statement protesting against the "uncontrolled and unwarranted rise in prices of foodstuffs, hygiene products and consumer goods."
"Officials have to do something against unemployment and the unbridled rise in prices as a matter of urgency," said one deputy, Asghar Gheranmayeh.
According to parliament's research centre, the price rises look set to continue in the current Iranian year, with inflation set to hit 24 percent. Money supply growth - a key indication of future price trends - is seen at a colossal 42 percent.
"There is no control on prices. Beauty products are up by 35 percent wholesale. The price of cooking oils has also gone up by 35 percent," said one storeholder who declined to be named.
Shopkeepers used the recent New Year holiday period to raise their prices when people returned from the break, with the price of fruit going up by 21.6 percent in the space of a week.
"A big bottle of Coke has climbed to 7,500 rials from 6,000 and the orange juice that I buy has doubled in price. My hairdresser has also raised his prices by 40 percent," complained one Iranian consumer.
The central bank has also issued a new high-denomination 50,000 rial note (about five dollars) in a move that appears linked to the rising prices, although the authorities deny any connection with inflation.
Economists have long pointed the finger towards the government of President Mahmoud Ahmadinejad, who was elected in 2005 on a platform of helping the poor reap the benefits of Iran's oil wealth.

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