Transport Sector Experiences Highest Inflation

EghtesadOnline: The average goods and services Consumer Price Index of the transportation sector in the 12-month period ending Aug. 21, which marks the end of the fifth Iranian month, increased by 47.2% compared with the similar period of the year before.

News ID: ۷۵۰۸۱۷

26 August 2020

This indicates the highest inflation 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 group stood at 298.2 for the month under review, indicating a 5.2% increase compared with the month before.

The transportation index registered a year-on-year increase of 65.1%, also the highest among the 12 groups under review.

The general average goods and services Consumer Price Index in the 12-month period ending Aug. 21 increased by 25.8% 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 July 21, at 26.4%.

The consumer inflation for the month under review (July 22-Aug. 21) registered a year-on-year increase of 30.4% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month ending July 21 has been put at 26.9%.

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 235.9 in the fifth Iranian month, indicating a 3.5% rise compared with the month before.

SCI put average annual inflation for urban and rural areas during the month under review at 25.9% and 25.4%, respectively.

CPI registered a year-on-year increase of 30.6% for urban areas and 29.6% for rural areas in the month ending Aug. 21.

The overall CPI reached 234.7 for urban households and 242.5 for rural households, indicating a month-on-month increase of 3.5% and 3.2% for urban and rural areas, respectively.

$346m in Losses Over Coronavirus

Iran’s transportation sector has sustained an estimated 80,000 billion rials ($346 million) in losses following the outbreak of the new coronavirus, says 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, Mohsen Sadeqi added.

The government has approved a 750-trillion-rial ($3.24 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 Central Bank of Iran’s website.

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 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 had set 18% interest 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 added.

Hemmati said only businesses that did not lay off workers during the corona crisis would be eligible for the loans, as 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 ($40.65 million) worth of 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 and social distancing are being followed and trains are running as scheduled.