Saturday, December 4, 2010

Iran Inflation Rising; Subsidy Reform Announcement Expected Soon

Iran's Central Bank Governor Mahmoud Bahmani today told reporters in Tehran that the country’s rate of inflation rose for the third month running to 9.7%. The governor attributed the rise to “psychological atmosphere” in the country [IRIB, 4 December].

Observers in Tehran expect the imminent announcement by President Ahmadinejad of the start of the first phase of the removal of government’s $100 billion annual subsidies. This phase would include subsidy removal of energy products, including gasoline and electricity. The current rise in inflation rate could be the result of the anticipation of the significant rise in energy prices.

The government has begun a concerted effort to keep non-energy prices at the official levels in a move to curb the inflation.

"All efforts of the government and the central bank are to keep the inflation rate in single digits,” Bahmani said.

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