Rising prices and the government's economic management are likely to be a major battleground in next year's election when President Mahmoud Ahmadinejad is expected to run for a new term.
The president has faced mounting criticism from political opponents and the public for his economic policies. Economists say he has spent petrodollars too liberally, which has pushed up cash supply and prices.
The president has said inflation is a global issue and has also blamed Iran's enemies for deepening the problem. But he has pushed to keep interest rates below inflation, which economists say restricts the central bank's efforts to curb price rises.
Prices have been rising steadily since Ahmadinejad came to power in mid-2005, when the inflation rate was about 11 percent.
Sarmayeh and other newspapers cited a central bank report for the inflation figure of 26.1 percent for the Iranian month of Tir, which ended on July 21. That report was not immediately available on the bank's website www.cbi.ir.
Some independent economists put inflation several percentage points higher than the central bank rate, a figure they say is based on a basket of goods that does not accurately reflect the items that most affect ordinary Iranians buy. (Writing by Edmund Blair; Editing by Victoria Main)
