The Consumer Price Index (CPI) is one of the important economic indicators which is used to measure changes in prices of a defined basket of goods and services. CPI is representative of consumption expenditure by households and a measure of inflation. Generally CPI is a comparison between current prices and base year. The prices of items included in basket are determined a value of 100.0 in the base period and the prices in other periods are expressed as percentages of the prices in the base period.

Macroeconomic indicators are calculated and released by two organization in Iran independently; the Statistical Centre of Iran (SCI) and Central Bank of Iran (CBI). These organizations are responsible for periodic reports about some indices, amongst them; unemployment rate, Producer Price Index (PPI) as well as CPI. Although the CPI reported by these entities have a little bit difference mainly due to some items included in the basket and their weight in that, but the difference is slight and can be neglected. Laspeyres formula is the common method which is used by both entities for calculation of CPI. Selected Iranian year as the base year is currently 1390 (2011).

The composition and weight of each item used in calculating of the CPI depicted in the table below:

The composition of consumer price index and weight of items according to CBI

Item Per cent of total weight
Food and beverages 27.38
Tobacco 0.35
Clothing and footwear 4.94
Housing, water, electricity, gas and other fuels 32.82
Furnishings, household equipment and Routine household maintenance 5.13
Health 6.98
Transportation 9.87
Communication 2.38
Recreation and culture 2.85
Education 2.24
Restaurants and hotels 1.86
Miscellaneous goods and services 3.20

 

Irans economy has been suffering from high rate of inflation over the past decades especially in the latest years because of expansionary monetary policy, subsidy reforms and international sanctions. Controlling the inflation rate has been one of the major macroeconomic objectives of the government. High inflation and its destructive impacts on public welfare are concerned by social and economic policymakers. So, they aim to control the inflation rate. Tackling the dual problem of a rise in in? ation and a fall in output are important challenges that both the Iranian government and the CBI involved in the past two years and it seems to be continued in the near future. Considering the low oil prices without solid progress on structural reforms, the country may encounter significant constraints in achieving sustainable growth and lower inflation.

Iran Consumer Price Index (CPI)  data source: SCI

CPI