Low-Income Households Take Brunt of Rising Prices

EghtesadOnline: The Statistical Center of Iran, for the first time in the country, has released inflation rates for each of the 10 deciles in which Iranian households are categorized on the basis of their income.

News ID: ۷۸۱۱۸۹

14 January 2018

The data show low-income households are taking the brunt of rising prices, the SCI report showed.

According to Javad Hosseinzadeh, the deputy head of SCI, the initiative will enable the government to locate the target population of its welfare policies and develop better plans for both high- and low-income households’ consumer basket—a sample of consumer goods and services used to track prices, Mehr News Agency reported.

SCI said the average goods and services Consumer Price Index in the 12-month period ending Dec. 21, which marks the end of the Iranian month of Azar, increased by 8.8% for the first decile (those with the lowest income), whereas it rose by 7.4% for the 10th decile (those with the highest income), compared with last year’s corresponding period, Financial Tribune reported.

The inflation rate for the second to ninth decile stood at 8.8%, 8.7%, 8.6%, 8.5%, 8.4%, 8.3%, 8.2% and 8% respectively.

According to Hosseinzadeh, food, beverages and tobacco account for 43.3% of low-income households’ consumer basket whereas they constitute 17.22% of the rich households'. Non-food items and services’ share in the consumer basket of households in the first decile was 56.7% against the 10th decile's 82.78%.

Income deciles are groupings that result from ranking either all households or all persons in the population in the ascending order according to income, and then dividing the population into 10 groups, each comprising approximately 10% of the estimated population.

SCI has also shifted, as of this month, the base year for releasing its CPI statistics from the fiscal 2011-12 to the last Iranian year that ended on March 20, 2017.

As per SCI's latest announcement, CPI in the 12-month period ending Dec. 21 increased by 8% for the entire country (irrespective of income deciles) on average compared with last year’s corresponding period. The inflation rate shows a 0.2% increase compared to that of the previous month.

SCI put urban and rural inflation for Azar at 7.8% and 9.2%, indicating a respective 0.2% and 0.3% growth month-on-month respectively.

The overall CPI stood at 110.4 in Azar, up 0.7% month-on-month. For urban and rural areas, it stood at 110.3 and 111, registering a 0.7% and 1% month-on-month growth.

The report put the inflation's year-on-year increase at 8.9%. For urban and rural areas, it stood at 8.9% and 9% respectively.

The Iranian economy has been beset by high inflation rates compared to the world average. A point-to-point inflation of 45% was handed to Rouhani in June 2013 by his predecessor.

However, the incumbent president managed to gradually rein in the runaway rate and bring it down to a single digit territory for the first time after about a quarter century in June 2016. The rate has been hovering around 10% ever since.

The World Bank is expecting Iran’s inflation rate to reach 11.5%, 10.9% and 10.6% in 2017, 2018 and 2019 respectively.

The International Monetary Fund projects that the inflation will pick up temporarily in 2018-19 from 9.9% in 2017-18.

And, in its latest World Economic Situation Prospects, the United Nations has forecast a 5.3% economic growth for Iran in 2017, expecting the rate to settle at 5.1% and 5% over the two subsequent years respectively.