AFP: The rise in food prices accelerated in Iran in September, when the cost of a basket of 45 staple items showed a mighty leap of nearly 50 percent, a newspaper reported on Sunday, citing central bank figures.
TEHRAN (AFP) — The rise in food prices accelerated in Iran in September, when the cost of a basket of 45 staple items showed a mighty leap of nearly 50 percent, a newspaper reported on Sunday, citing central bank figures.
For the three months of Tir, Mordad and Shahrivar (July to September), year-on-year food price inflation was 28.98, 40.08 and 48.46 percent respectively, taking the average increase for the period to 39.2 percent, Kargozaran newspaper said.
Items in the basket include meat, beans, rice, sugar, fruits and dairy products.
Many economists have accused President Mahmoud Ahmadinejad of directly fuelling price rises by ploughing huge amounts of cash into the economy to fund local infrastructure projects.
In spite of efforts by the central bank to shrink the excessive volume of loans, analysts say the government has already injected so much oil money into the economy that inflation will remain high for months and years to come.
Ahmadinejad last week replaced the head of the central bank, Tahmasb Mazaheri, in a bid to bring more harmony to his economic team around his expansionary policies.
The central bank was eager to reassert its control of money supply — a key indicator of future price trends — after annual inflation hit 26 percent in June.
In August, Iran's inflation rate reached 27.6 percent, as citizens were again battered by rising prices of foodstuffs and other goods.
In a letter published last week, Mazaheri blamed sharp growth in money supply and a surge in cash injection to the economy for the rampant inflatin.
"Despite policies adopted to control inflation there are still decisions being taken and legislation in place which fuel inflation," he said.
Iranian academics have prepared a third letter to Ahmadinejad on economic problems, the Iranian labour news agency ILNA reported.
"One of the issues stressed by economists is the consequences of the implementation of plans such as liberalisation of prices and payment of subsidies in cash," one unnamed economist involved in drafting the letter was quoted as saying.
In a bid to fulfil his electoral campaign slogans to "spread justice", Ahmadinejad has launched an "economic reform plan", under which low-income families will receive cash payments instead of subsidies being channelled indirectly.
Iranian economists have previously sent Ahmadinejad two letters since his election in 2005 analysing the national economy and proposing solutions.
The replacement of the experienced and unwavering central bank head sparked criticism from some MPs and economists in Iran, which is OPEC's second-biggest producer.
The move came after a public struggle with the labour ministry over financial policy, especially interest rates and loans to financial institutions.
The sacking of Mazaheri is "a serious turn" in economic and political policy as it is likely to lead to increased state spending, prompting "higher inflation and an economic collapse," Saeed Laylaz, an economist, told AFP.
Mazaheri had been seeking to reduce the huge budget deficit that Ahmadinejad's government faces because of what Laylaz described as the president's financial mismanagement. The dismissal of the central bank governor will unlock the state treasury's door, the analyst said.
"There is a 10 billion to 15 billion dollars budget deficit" and the central bank was blocking further low-interest loans, a policy which would have caused many people to turn their backs on Ahmedinejad when he seeks re-election next June, Laylaz said.