Narrow Money Supply Growth at Alarming Rate: Economist

EghtesdaOnline: The annual rate of narrow money growth between the years 2018-19 and 2021-22 jumped 50%. It increased to 56.3% during the seven months from the beginning of the current year (ending Oct. 22, 2022)

News ID: ۷۵۲۲۳۲

07 February 2023

Iran registered an average inflation rate of 18-20% for a four-decade period. It is an economy struggling with chronic inflation; in fact it has lived through the most chronic form of inflation in the world. There are many reasons showing that economic inadequacies including low economic growth rate and investment rate, dependency on oil revenues and even exchange rate fluctuations all emanate from chronic inflation and the governments’ response to it. Veteran economist Masoud Nili prefaced an editorial for Persian daily Donya-e Eqtesad with this note. Below is a translation of the text.

Statistics show that the first half of 2018-19 Iranian year was a turning point in Iran’s economy in terms of inflation; the country’s inflation regime changed from a relatively constant high inflation (around 20%) to a soaring inflation. According to the Statistical Center of Iran, the average year-on-year inflation in 2018-19 was 26.5%; it was 34% in 2019-20; 36% in 2020-21; 41% in 2021-22 and 48% in the 10 months to January 20, 2023. As you see, the economy has distanced itself from the average inflation of 18.5-20%. Moreover, the new inflation regime has a completely upward trend. In fact, the 10-month rate cited above marks, without a question, the inflation peak of Iran’s economy, after fiscal years 1942-43 and 1943-44. During the past 250 months, the monthly inflation was more than 4% only in 15 months, 12 of these months were from 2018-19 onward, and three of them were in the last 10 months of 2022-23. Year-on-year inflation of above 50% has been recorded only in six months, four of which have been recorded in 2022-23.

The inflation of food and beverages is an indicator of the pressure on the livelihood of the low-income groups as well as the middle class. The year-on-year inflation of food hit the decades’ high of 64.9% in the last month (Dec. 22, 2022-Jan. 20).