Transportation Sector Experiences Highest Price Growth

EghtesadOnline: The average annual goods and services Consumer Price Index of the transportation sector in the 12-month period ending June 20 increased by 45.1% compared with the similar period of the year before.

News ID: ۷۵۰۳۳۹

29 June 2020

This marks the highest growth among 12 groups of the basket of consumer goods and services purchased by Iranian households.

With a coefficient of 9.41%, the CPI of the sector stood at 265 for the month, indicating a 0.5% increase compared with the month before, according to the Statistical Center of Iran.

The transportation index registered a year-on-year increase of 48.6%--also the highest among 12 groups of the basket of consumer goods and services purchased by Iranian households.

Overall, the average goods and services Consumer Price Index in the 12-month period increased by 27.8% compared with the corresponding period of last year, latest data released by SCI show.

The center had put the average annual inflation rate for the preceding Iranian month, which ended on May 20, at 29.8%.

The consumer inflation for the month under review (May 21-June 20) registered a year-on-year increase of 22.5% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending May 20 was at 21%.

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 214.2 for the month, indicating a 2% rise compared with the month before.

CPI registered a year-on-year increase of 22.7% for urban areas and 21.1% for rural areas in the month ending June 20.

The overall CPI reached 212.8 for urban households and 221.9 for rural households, indicating a month-on-month increase of 2% and 2.2% for urban and rural areas, respectively.

SCI put average annual inflation for urban and rural areas at 27.7% and 28.2% respectively.

$404m in Losses Over Coronavirus

Iran’s transportation sector has sustained an estimated loss of 80,000 billion rials ($404 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 ($3.78 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 insurance 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 an 18% interest rate on loans, the real interest rate would still be negative when compared to the annual inflation rate … Any rate below 12% would apparently impose further financial strain on banks,” he said.

Hemmati noted that 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 ($47.47 million) in low interest loans (12%) to rail passenger transportation companies to help them back on their feet after they incurred losses due to the outbreak of the novel coronavirus.

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

Presently all coronavirus related protocols as well as social distancing are being followed and trains are running as per the timetables.