AFP: The Iranian central bank has warned rising money supply growth will further push up inflation, an acute economic problem in the Islamic republic, the Etemad Melli newspaper reported on Wednesday. TEHRAN (AFP) The Iranian central bank has warned rising money supply growth will further push up inflation, an acute economic problem in the Islamic republic, the Etemad Melli newspaper reported on Wednesday.
“Indices … show that the inflation pressures will grow in the coming months,” the deputy governor of the central bank, Hossein Ghazavi, was quoted as saying.
He pointed to the inflation rate which nearly doubled between the fiscal year ending September 2008 and the previous year, warning that there was “major inflation underway”.
“The inflation rate was 8.9 percent in the previous year and it has increased to 15.8 percent,” Ghazavi said.
In early November, the new governor of Iran’s central bank, Tahmasb Mazaheri, warned the government of President Mahmoud Ahmadinejad over money supply growth, urging measures to prevent a further rise in inflation.
The huge growth in money supply has added to fears over prices in the Islamic republic which have surged in recent weeks, especially for basic foodstuffs and services, hitting the poor hardest.
At the end of September 2008, Ghazavi said money supply had grown by a colossal year-on-year rate of around 37 percent.
Ahmadinejad’s economic policies have been criticised for stoking inflation by ploughing windfall revenues from high oil prices into local infrastructure projects promised on provincial visits.
The government insists that it is merely fulfilling Ahmadinejad’s election promises of making ordinary people feel the benefits of oil wealth and has inflation under control.