Central Banks Acknowledges Increase in Inflation
Despite promises by the Ninth Administration to bring inflation down to single digits, the latest figures released by the Central Bank for the month of Shahrivar (August-September) suggest that the inflation rate continues to rise. According to the data released by the Central Bank, inflation stood at 15.8 percent in the twelve months ending in Sharivar of 1385 (2006-2007).
The inflation rate was 12.8 percent in Farvardin (March-April), 13.6 in Ordibehesht (April-May), 14.2 percent in Khordad (May-June), 14.8 percent in Tir (June-July), and 15.4 percent in Mordad (July-August). Experts speculate that the inflation rate may exceed 20 percent by the end of year unless the government takes serious action.
Meanwhile, economic experts and international organizations such as the International Monetary Fund (IMF) believe that the real inflation rate is much higher than that announced by the Central Bank. The Iranian Central Bank has a unique formula for computing inflation and accuses the IMF of using an inaccurate formula.
For example, the Central Bank has taken housing prices out of the formula for computing inflation. Housing prices have risen by unprecedented amounts in the past year.
High inflation rates and the recent rise in housing and goods prices have disillusioned many of Ahmadinejad’s supporters. The administration originally promised to bring inflation down to single digits and share the oil wealth with the population.
Results of a survey conducted by the Iranian Student Polling Agency (ISPA) show that 53 percent of Ahmadinejad’s supporters will not vote for him again in the next presidential elections. The poll’s respondents rated the government’s performance in “controlling inflation,” “protecting social freedoms,” and “implementing campaign promises” as “unsatisfactory.”
The public’s dissatisfaction with the government’s mismanagement of the economy, which is exemplified in persisting high inflation rates, demonstrates a reality that the public has reached before the Central Bank.
Without using economic jargon and political phrases, people simply ask, how is it that the price of oil has reached its highest level, but the people’s living conditions have deteriorated?
Former head of the National Security Council, Hassan Rowhani, reformulated this worry: “In previous years, when the price of oil reached 18 or 20 dollars, the feeling was that good economic times are in the horizon. But now, with 80 dollar a barrel oil, which has multiplied our economic power, we still do not see signs of a healthy and progressive economy… If we had a comprehensive and precise plan many of our current problems would have been solvable.”