The latest report of the Central Bank of Iran(CBI) about consumer price index was announced in previous month February 2017. CBI ‘s statistics shows that inflation rate in three scales which are: monthly, average and point-to point has increased comparing to previous month. Nevertheless, it is unlikely that the average inflation rate goes above the single-digit range until the end of this year (Persian Calendar). If forecasts about inflation rate of months ahead comes true, we will experience a single-digit inflation rate after a quarter of the current century. If we look at point-to point inflation rate in deep, we will find out that this rate has become two-digits after one year and two months so that it is possible that average inflation rate becomes more than 10 percent by the next year. Note that based on the economic and political conditions especially presidential election in May 2017, this circumstance is unexpected until that time and occurs only if the monthly inflation rate in the remaining three months will be at least 1.5%.
Rising trend of monthly inflation rate
According to latest published report by CBI, consumer price index has risen to 257.7 which indicates that monthly inflation rate of eleventh month of current Persian year (Jan/Feb 2017) is 1.1%. This rate was 0.8% for previous month so that monthly inflation rate increased 0.3% compared to previous month. Average monthly rate is almost 0.9%, therefore the monthly rate in February 2017 is even more than the year’s average.
Recursive trend in point-to-point inflation rate
Point-to-point inflation rate measures changes in consumer price index levels over the same previous period. Based on reports, this rate was below 10 % in December 2015 after almost 5 years and became single-digit. This trend continues until May 2016 and reached its bottom line but after that, the recursive trend has been started. As a result of this trend, point-to-point inflation rate in February 2017 broke the single-digit range after almost one year and became 10.6%. We can consider this change as a warning for change in direction of average inflation rate.
Average inflation rate
When we talk about inflation rate, in most cases we mean annual average inflation rate which accounts data and prices of 24 previous months. With regards to statistics, average inflation rate in February 2017 is about 8.7% and increased 0.1% compared to previous month. This increase indicates an upward trend in average inflation rate.
In this article, we reviewed different kinds of inflation rate measurement in Iran. The most important issue about inflation in recent days is that inflation rate of Iran became single-digit after many years and as presidential election in Iran will happen in 3 months from now, controlling the current rate is quite important for the government but the point is that whether single-digit inflation rate will be stable considering different factors until presidential election or not?
The most likely scenario is considering the average monthly inflation rate that is 0.9% for upcoming months up to election period. According to this, average inflation rate will be still single-digit and becomes 9.6% but the point-to-point inflation will be 11.2%. If this trend continues until the end of next year, average inflation rate will be 11.3% which is close to the IMF’s forecast about Iran.