‘Tobacco Inflation’ at 21.8 Percent

EghtesadOnline: The average goods and services Consumer Price Index of “tobacco” in the 12-month period ending Nov. 20, which marks the end of the eighth Iranian month, increased by 21.8% compared with the corresponding period of the year before.

News ID: ۷۵۱۶۸۵

10 December 2020

According to the Statistical Center of Iran, the CPI of “tobacco” among the 12 groups of the basket of consumer goods and services purchased by households stood at 420.9 in Aban, indicating a 6.2% rise compared with the month before.

The tobacco index, which has minimum impact on total inflation rate with a coefficient of 0.59%, registered a year-on-year increase of 50.7%.

The overall average goods and services Consumer Price Index in the 12-month period ending Nov. 20, increased by 29% compared with the corresponding period of last year.

The consumer inflation for the month under review (Oct. 22-Nov. 20) registered an increase of 46.4% compared with the similar month of the previous Iranian year.

The overall CPI (using the Iranian year to March 2017 as the base year) stood at 275 during the period, indicating a 5.2% rise compared with the month before.

Latest data from the Ministry of Industries, Mining and Trade reveal that 7.58 billion cigarettes were smuggled into Iran during the seven months to Oct. 21, indicating an 8.9% increase compared with the corresponding period of last year, Mehr News Agency reported.

An estimated 37.91 billion cigarettes were smoked during the period, registering no significant change year-on-year.

The report added that cigarette exports stood at 71 million during the period, indicating a 42% YOY increase.

Local production stood at 30.2 billion, registering a 2.6% decline year-on-year.

The government has banned import of cigarettes to Iran for a long time now.

There are 23 cigarette producing companies and 39 tobacco producing companies in Iran.

The number of cigarette manufacturers in Iran increased from seven companies with an annual output of 29 billion cigarettes in the year ending March 2015 to 12 companies with an annual output of 45 billion cigarettes in the year ending March 2017 to 23 companies with an annual output of 55 billion in the year ending March 2020.

According to a report by the Persian daily Donya-e-Eqtesad, citing statistics by the Industries Ministry, two leading international manufacturers of cigarettes, namely British American Tobacco and Japan Tobacco International accounted for more than 60% of total cigarette production in Iran last year (March 2019-20).

The report puts the total turnover of tobacco industry in Iran at 300 trillion rials ($1.15 billion) last year.

“Misguided policies regarding the tobacco industry, restrictive regulations and lack of thoughtful planning have lowered the output of Iranian Tobacco Company in recent years,” says a member of the company’s board of directors.

“ITC’s production last year [March 2019-20] reached around six billion cigarettes compared with nine billion in the year ending March 2019 and 12 billion in the year ending March 2018," Payam Hamedani-Mojarrad was quoted as saying by ISNA.

The oldest Iranian tobacco company has 81 production lines and is capable of producing 40 billion cigarettes annually to meet 50% of the market demand. However, according to the official, the government has yet to decide whether it is willing to improve its presence in tobacco industry, which is one of the top five high-yielding industries in the world.

“ITC has nearly 5,000 people on its payroll and purchases tobacco from 15,000 farmers, indicating that it has created 20,000 direct and indirect jobs that could increase to 100,000 if the government were to create the right climate,” he said.

Noting that imports account for 60-70% of the 80 raw materials needed in cigarette production, Hamedani-Mojarrad said petrochemical and other domestic industries have the potential to supply much of the raw materials, including essence, cigarette paper and packaging materials.

Iranian Tobacco Company, established in 1937, was totally owned by the government before 2013 when a portion of its shares was handed over to Iran Steel Pension Fund.