Transportation Sector Experiences Highest Inflation

EghtesadOnline: The average Consumer Price Index of transportation sector in the 12-month period ending May 20, increased by 45.7% compared with the similar period of the year before—the highest among 12 groups of the basket of consumer goods and services purchased by households during the period under review.

News ID: ۷۵۰۲۳۴

14 June 2020

With a coefficient of 9.41%, the CPI of the group stood at 263.7 for the month, indicating an 8.6% increase compared with the month before, which was also the highest.

The transportation index registered a year-on-year increase of 48.4%, the highest experienced by the 12 groups under review.

The overall average goods and services Consumer Price Index in the 12-month period ending May 20 increased by 29.8% compared with the corresponding period of last year, latest data released by the Statistical Center of Iran show.

SCI had put the average annual inflation rate for the preceding Iranian month, which ended on April 19, at 32.2%.

The consumer inflation for the month under review (April 20-May 20) registered a year-on-year increase of 21% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending April 19 was 19.8%.

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 210 last month, indicating a 2.5% rise compared with the month before.

CPI registered a year-on-year increase of 21.3% for urban areas and 19.3% for rural areas in the month ending May 20.

The overall CPI reached 208.7 for urban households and 217.1 for rural households, indicating a month-on-month increase of 2.6% and 2.1% for urban and rural areas, respectively.

SCI put urban and rural average annual inflation for the month under review at 29.7% and 30.8% respectively.

“Iran’s transportation sector has suffered an estimated loss of 80,000 billion rials ($444 million), following the outbreak of the coronavirus,” says Mohsen Sadeqi, a senior official with the Ministry of Roads and Urban Development.

After tourism, transportation took the biggest hit from the pandemic, which makes it a priority to receive government aid, he added.

The government has approved a 750 trillion-rial ($4.16 billion) package to help low-income households and struggling businesses impacted by the rapidly spreading coronavirus. The loans will be given to small- and medium-sized enterprises hit hard by the pandemic, according to the website of the Central Bank of Iran.

Noting that rail companies and airlines mostly take out loans in foreign currency rather than in the rial, the senior official said, “In addition to corona relief measures like granting cheap loans, tax and premium relief, the extension of repayment schedule of foreign currency loans is the newest proposal we came up with to support rail companies and airlines.”

“The lending rate for the government aid package will be 12% to be repaid within two years,” Abdolnasser Hemmati, the CBI governor, said.

Commenting on the interest rate, Hemmati said it is reasonable, given the high inflation rate in the country.

“Even if banks set 18% interest on loans, the real interest rate would still be negative when compared to annual inflation … Any rate below 12% would apparently impose further financial strain on banks,” he said. Hemmati said only businesses that did not lay off workers during the corona crisis would be eligible for the loans. He instructed banks to process the loans soon and cut red tape.

According to Saeed Rasouli, the head of the Islamic Republic of Iran Railways, the government is offering a total of 9.4 trillion rials (52.22 million) worth of low interest loans (12%) to rail passenger transportation companies to help them back on their feet after the losses they have incurred due to the coronavirus outbreak.

“The loans have been made available from Monday [June 8] and 63 companies have been found eligible to receive them,” Rasouli was quoted by IRNA as saying.

Presently, all coronavirus related protocols as well as social distancing are being followed and trains are running according to timetables.