Iranian inflation accelerates, posing headache for new president

(Reuters) – Iran’s inflation rate surged to 45 percent in June, official data showed, adding pressure on squeezed Iranian households and an indication of the huge task President-elect Hassan Rouhani faces to repair the economy.

Spiralling prices and constricted spending power have left millions of Iranians struggling against a virulent combination of Western economic sanctions and poor fiscal management.

Rouhani, a former nuclear negotiator, was elected last month on a campaign that prioritised Iran’s economic difficulties and vowed to create a government of “prudence and hope” to restore the country’s financial health.

But while a majority of the country’s political factions have hailed his victory, the inflation rate will be a big concern for the moderate cleric who takes office on Aug. 4.

Prices rose 45 percent in the month up to June 21 compared to the same month a year earlier. They accelerated from 41.7 percent inflation in the month to May 21.

Prices rose 25 percent in the corresponding calculation for last year, official figures showed.

“The Central Bank has announced the price index for goods and consumer services … for the month of Khordad this year (ended June 21) … the inflation rate reached 45.1 percent,” Mehr news agency said late on Wednesday.

Inflation averaged 35.9 percent over the 12 months through June 21, the central bank said earlier this month.

Inflation has resulted in several-fold price increases of staple foods and fuel and the prospect of finding a job is increasingly difficult because of slumping investment and productivity.

Independent analysts say the official figures do not show the real picture and some estimate actual inflation is double the official figures or more.

With deep rooted problems in the economy, and what critics say has been eight years of fiscal mismanagement under President Mahmoud Ahmadinejad, and no for seeable end to sanctions imposed by the United States and its allies against Iran’s disputed nuclear programme, Rouhani is unlikely to be able to turn the tide quickly.

Iran says its nuclear programme is for entirely peaceful purposes.

By Reuters


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