Price Peaks in Transportation

EghtesadOnline: The average goods and services Consumer Price Index of transportation increased by 51.5% in the 12-month period ending Sept. 21, which marks the end of the sixth Iranian month, compared with the similar period of the year before.

News ID: ۷۵۱۱۶۰

01 October 2020

Transportation marks the highest rise among 12 groups of the basket of consumer goods and services purchased by households.

With a coefficient of 9.41%, the CPI of transportation stood at 323.2 in the month, indicating an 8.4% increase compared with the month before–also the highest among the 12 groups under review.

The index registered a year-on-year increase of 80.8%, again the highest among the 12 aforementioned groups, according to the Statistical Center of Iran.

The overall average goods and services Consumer Price Index in the 12-month period ending Sept. 21 increased by 26% 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 that ended on Aug. 21 at 25.8%.

The consumer inflation for the month under review (Aug. 22-Sept. 21) registered an increase of 34.4% compared with the similar month of the previous Iranian year. The year-on-year inflation of the month was 30.4%.

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 244.3 last month, indicating a 3.6% rise compared with the month before. Month-on-month consumer inflation was 3.5% for the preceding month (July 22-Aug. 21.)

SCI put average annual inflation for urban and rural areas at 26.1% and 25.4%, respectively.

CPI registered a year-on-year increase of 34.5% for urban areas and 34.1% for rural areas in the month ending Sept. 21.

The overall CPI reached 243.1 for urban households and 251 for rural households, indicating a month-on-month increase of 3.6% and 3.5% for urban and rural areas, respectively.

The 12 groups of the basket of consumer goods and services purchased by households surveyed by the SCI include "food and beverages" with a coefficient of 26.64%, "tobacco" with a coefficient of 0.59%, "clothing and shoes" with a coefficient of 4.78%, "housing, water, electricity, natural gas and other fuels" with a coefficient of 35.5% (highest), "furniture, home appliances and their maintenance" with a coefficient of 3.93%, "health and treatment" with a coefficient of 7.14%, "transportation" with a coefficient of 9.41%, "communications" with a coefficient of 2.87%, "leisure and culture" with a coefficient of 1.65%, "education" with a coefficient of 1.86%, "hotels and restaurants" with a coefficient of 1.44% and "miscellaneous items and services" with a coefficient of 4.18%.

Slowly Recovering From Coronavirus

The transportation sector’s recovery from the shock of coronavirus has gathered pace in the past couple of months, says Mohsen Sadeqi, a senior official with the Ministry of Roads and Urban Development.

“The number of transported passengers from Feb. 20 to Aug. 21 declined by 45% compared with pre-pandemic levels. Revenues dropped by 10,000 billion rials [$41 million] and the number of intercity journeys by using different means of transportation decreased by 30%. A total of 73 million passengers traveled over the same period of last year, which has now plummeted to 40 million. The number of trips has fallen to 5.2 million from 7.4 million year-on-year,” he was quoted as saying by Coronomy.ir.

“However, the number of transported passengers increased by 10% on a month-on-month basis from the month ending June 20 to the month ending Aug. 21. People are now travelling more, but generally, it is down 45% compared with the year-ago levels.”

Referring to the importance of social distancing while travelling, Sadeqi said, “Passenger seating capacity of each bus stood at 21 people last year; it is down to 13-14 people now. The occupancy rate has decreased from 65% to 43% this year.”

Air Travel

On the impact of coronavirus on air travel, the official said there were a total of 790,000 international passengers and 1.63 million domestic passengers in the month ending April 20, 2019, while this year’s same month saw 21,000 international and 422,000 domestic passengers, i.e. one-40th or 2.5% of international passengers [97.5% decline] and a 75% decrease in the number of domestic passengers last year.

“International air passengers stood close to 21,000 in the month ending May 20, 31,000 in the month ending June 21 and 54,000 in the month ending July 21 compared with 620,000 in the month ending May 21, 2019, 807,000 in the month ending June 21, 2019, and 1.01 million in the month ending July 22, 2019,” he said.

“The number of domestic air passengers is also on the rise: 1.06 million passengers travelled to local destinations in the month ending July 21. Although the figure is markedly lower than last year’s 1.7 million, it shows some improvement compared with a few months back. The number of domestic flights in the months ending May 21 and June 21, 2019, stood above 1.52 million and 1.64 million, respectively. It dropped to 798,000 and 924,000 in the same months of the current year.”

Noting that local airlines and Iran Airports Company have sustained massive losses following the outbreak of coronavirus, he said, “By giving loans, the government is trying to keep Iran’s 14 airlines from collapsing. For example, IranAir [the country’s flag carrier airline] has received 5,000 billion rials [$17 million] in loans. Mahan Air will receive 4,200 billion rials [$14 million], Iran Aseman Airlines and Qeshm Air each will get over 1,000 billion rials [$3.44 million] and Taban Air will receive between 600 and 700 billion rials [$2-2.37 million] in loans."

Government Aid

According to Sadeqi, after tourism, transportation took the biggest hit from the pandemic, making it a priority to receive government aid.

The government has approved a 750 trillion-rial ($2.5 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.

“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.

The CBI chief said only businesses that did not lay off workers during the corona crisis would be eligible for the loans, while instructing banks to process the loans soon and cut red tape.

Hemmati noted that rail companies were also badly damaged by coronavirus pandemic.

“The number of rail passengers stood at 2.3 million in the month ending April 20, 2019, 2.3 million in the month ending May 21, 2019, and 2.4 million in the month leading to June 21, 2019. These figures reduced to 100,000 passengers, 300,000 passengers and 700,000 passengers in the corresponding months of the current year. The number of rail travels reached 800,000 in the month ending July 21 compared with 2.7 million of the last year’s similar month,” he concluded.