The latest report published by Central Bank of Iran (CBI) on 24th of February about Consumer Price Index(CPI). CBI`s statistics shows inflation rate in three different scales which are as follow: monthly, average and point-to-point inflation rate. Forecasts resulted from this report implies that average inflation rate will be single-digit for the second successive year.

As it is shown in the chart below, monthly inflation rate for October and November 2018 were 1.3 and 1.9 percent respectively and it was expected that the upward trend may continue but according to CBI, CPI index in January 2018 was 112.4 and has risen to 113.4 in February 2018 so that monthly inflation rate is 0.9%. This number for the previous month was 0.4 % and it is the second months in which the monthly inflation rate is reported under 1 percent.

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Another scale for measuring inflation rate is point-to-point inflation rate. This criterion measures changes in consumer price index levels over the same previous period. Point-to-point inflation rate as shown in the chart below, has experienced three different directions in current year (2017-2018). From February to October 2017, point-to-point inflation rate decreased from 12.7% to 8.4%. CBI reduced the interest rate on deposits on September and due to this, market expectations changed and gradually inflation rate comes to 10 percent. This trend didn’t last long and again inflation rate in two recent months re-entered in downturn channel. Inflation rate in January and February again was single-digit and it was 9.7% and 9.4 % respectively. Due to changes in inflationary expectations, reducing inflation rate in months ahead is possible. If inflation rate in February is under 1.7%, point-to-point inflation rate will be around 8 percent.

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When we talk about inflation rate, in most cases we mean annual average inflation rate which accounts data and prices of 24 previous months. Average inflation rate in Jan-Feb 2018 was 9.9% after two months of being double digit. With regards to statistics and calculations, it is highly possible for average inflation rate to be under 10 and this will happen unless the monthly inflation rate in the last month of winter will be more than 4.4%. Generally, monthly inflation rate in last month of Persian calendar (Solar year) is higher. Nevertheless, the last time in which the monthly inflation rate was higher than 4 percent is going back to February 2013 and it was 5.3%. In previous year, February rate was 2.1% and it is unlikely that February rate exceeds 4%.

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In recent weeks, CBI represents new strategies of monetary policies in order to control foreign exchange fluctuations. By implementing this package, foreign exchange market has curtailed severely and Rial is being stable against other currencies. Besides this, CBI plan to open a certificate of deposit at rate of 20% and the pre-sale of gold coins in the form of a six-month and one-year-old basis has led to collect widespread liquidity from commodity markets. As a result of these actions, we can anticipate that inflation rate will be single-digit until the end of current year (Persian calendar). International Monetary Fund(IMF) forecasts inflation rate of Iran at 10.1 percent for current year however it seems that this forecast needs to be modified.