Services PPI Inflation Hits Record

EghtesadOnline: The average annual producer price inflation registered a record high in the third quarter of the current fiscal year (Sept. 22-Dec. 20, 2020).

News ID: ۷۸۶۲۸۳

16 March 2021

The average Producer Price Index for the services sector in the four-quarter period ending Dec. 20, which marks the end of the third quarter of the current fiscal year (fall), increased by 35.3% compared with the same period of last year. It marked the highest average annual inflation since winter 2013 (the earliest available data on services producers' inflation on SCI’s website).

The overall PPI for the services sector (using the year ending March 2017 as a base year) stood at 270.7 in Q3, indicating a 11.6% increase compared with the preceding quarter, the Statistical Center of Iran reported.

The index indicates a 40.2% increase compared with last year’s same quarter, which is the highest year-on-year inflation since spring 2012.

The services PPI is calculated based on the indexes of 13 subsectors, namely “water networks, wastewater management and wastewater treatment” with a coefficient of 1.2%, “repairing motor vehicles and motorcycles” with 2.8%, “transportation and warehouse services” with 23.2%, “services regarding accommodation and food” with 4.8%, “information and communications” with 8.5%, “financial brokerage services” with 1.7%, “real-estate services” with 26.8%, “professional, scientific and technical activities” with 3%, “administrative and support services” with 1.7%, “education” with 9.3%, “social work services” with 14.2%, “art, entertainment and leisure” with 1.1% and “services categorized as others” with a coefficient of 1.8%.

For “water networks, wastewater management and wastewater treatment”, the PPI stood at 165.5 in Q3, indicating a 1.5% increase compared with both the previous quarter and the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 4%.

PPI for “repairing motor vehicles and motorcycles” stood at 401.3, indicating a 17.4% rise compared with the previous quarter and a 60% growth compared with the same quarter of last year. The average PPI for the subsector in the four-quarter period ending Dec. 20 increased by 49.8%.

The index for “transportation and warehouse services” stood at 309.1, posting a 13.5% rise quarter-on-quarter and a 56% rise year-on-year. The average annual PPI for the subsector in the four-quarter period increased by 47.4%.

For “services related to accommodation and food”, PPI stood at 456.8, registering an 18.1% increase QOQ and a 57.9% increase YOY. The average annual PPI for the subsector in the four-quarter period increased by 48.9%.

For “information and communications” it stood at 205.5, indicating a 4.9% rise compared with the previous quarter and a 19.4% increase compared with the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 20.4%.

“Financial brokerage services” saw the PPI stand at 165.1, registering a 1.1% rise QOQ and an 18.2% increase YOY. The average annual PPI for the subsector in the four-quarter period increased by 17.3%.

For “real-estate services”, the index was at 187.9, posting an 8.1% rise compared with the previous quarter and a 24.6% increase compared with the same quarter of the year before. The average annual PPI for the subsector in the four-quarter period increased by 21.5%.

“Professional, scientific and technical activities” had a PPI of 239.5, indicating a 9.4% rise over the preceding quarter and a 41.6% increase over the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 31.9%.

The PPI measured for the subsector of “administrative and support services” stood at 429.4, showing a 20.8% growth compared with the previous quarter and a 55.4% increase over same quarter of the year before. The average annual PPI for the subsector in the four-quarter period increased by 55.3%.

“Education” had a PPI of 254.4, indicating an 18.1% rise over the preceding quarter and a 28.5% increase over the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 28.6%.

For “social work services”, PPI stood at 324.3, indicating an 8.3% rise compared with the previous quarter and a 42% increase compared with the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 38.4%.

“Art, entertainment and leisure” had a PPI of 277.7, indicating a 7.9% rise over the preceding quarter and a 36.8% increase over the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 35.5%.

And, “services categorized as others” registered a PPI of 340.5, indicating an 11.3% rise over the preceding quarter and a 45.6% increase over the same quarter of last year. The average annual PPI for the subsector in the four-quarter period increased by 40.7%.

Services Account for 49% of Job Market

The services sector employed 49% of the Iranian employed population (11.48 million) in the third quarter of the current fiscal year (Sept. 22-Dec. 20, 2020), 1% less than the corresponding period of last year, latest data released by the Statistical Center of Iran show.

The services sector consists of wholesale and retail trade; restaurants and hotels; transport, storage and communications; financing, insurance, real estate and business services; and community, social, education, health and personal services.

The industrial and agricultural sectors provided 34.3% and 16.7% of jobs respectively in Q3.

Over 8.02 million were employed in the industrial sector, indicating a year-on-year increase of 1.4%, while 3.9 million worked in the agriculture sector, posting a 0.4% decline YOY.

The services sector employed 9.49 million men and 1.98 million women, of whom over 6.95 million men and 1.06 million women were employed in the industrial sector and 3.27 million men and 632,542 women worked in the agriculture sector in Q3.

The SCI report also shows services sector accounted for 58.1% or 10.12 million of all jobs in urban areas and 22.7% or 1.35 million of jobs in rural areas.

The industrial sector made up 35.5% or 6.17 million of the jobs in urban areas and comprised 30.7% or 1.84 million of employment in rural areas.

This is while 6.4% or 1.11 million of the total jobs in urban areas and 46.6% or 2.79 million of the jobs in rural areas were in the agriculture sector.

The total Q3 employment rate was 37.5% (23.41 million), down 2.1% compared with the same quarter of last Iranian year. Employment rates for men and women were 63.2% and 11.8%, respectively, which constituted 19.72 million men and 3.69 million women in Q3.

The employment rate was 36.4% or 17.41 million in urban areas and 41% or 5.99 million in rural areas.

The share of employment of university graduates stood at 25% of the total employed population, wherein male and female graduate employment rate was 21.6% and 43.6%, respectively. Graduate employment rates in urban and rural areas stood at 30.8% and 8.4% of the total population of job-holders.

Employment is defined as persons of working age engaged in any activity to produce goods or provide services for pay or profit, whether at work during the reference period or not at work due to a temporary absence from a job, or to working-time arrangement.

Services have been the hardest hit economic sector amid the coronavirus pandemic.