In today’s issue of Donya-e Eghtesad (“World of Economy”), Iran’s leading business journal, Mehran Dabir Sepehri examines the reason behind the rising inflation in the recent months and takes issue with the explanations offered by the director of the central bank and the minister of economy. Click here to read the article in Farsi. Following are Sepehri’s main points:
- The director of the Central Bank of Iran (CBI) has blamed psychological factors for the rise in prices, presumably the public expectation of the impending removal of government subsidies of the energy sector. The minister of economy blames the rise in oil prices and the start of the academic year for the inflation.
- Sepehri believes the culprit is CBI’s own policy of dramatically increasing the money supply in the past two years, whose effects are now being felt. Sepehri points out that two years ago the total amount of currency in circulation in the country was $170 billion. The figure reached $235 billion last year (in Iranian calendar). No figures have been published for the current year, but the circulation volume is expected to be even higher this year. Sepehri predicts continued rise in prices because of the rise in money supply.