Iran Central Bank under fire for 24% inflation

Analysts in Iran criticize their country’s central bank for failing to bring hyperinflation under control.

October 22, 2012 04:09
2 minute read.
Iranian rial money exchange

Iran rial sanctions 390. (photo credit: REUTERS)


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Iranian economists and analysts continued to criticize the Central Bank of Iran on Sunday for poor reporting on the country’s skyrocketing inflation rate and for failing to stabilize its currency.

On Saturday, the central bank reported that the official inflation rate for the Iranian month of Shahrivar (August 22-September 21) was 24 percent, an increase of just half a percentage point over last month’s figure.

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However, as political infighting between Iranian President Mahmoud Ahmadinejad and his conservative critics continues over who is to blame for Iran’s economic crisis, Iranian analysts have warned that real inflation figures could be as much as double the central bank rate.

Dr. Mehdi Taghavi, a leading economist from Iran’s Allameh Tabatabai University, said recently that Iran’s inflation rate is close to 50%, according to Iran’s Labor News Agency.

Taghavi said that Iran’s inflation is the highest in the Middle East, that its economy is shrinking and that the country’s currency, the rial, has lost over 80% of its value in the past several months.

However, Western economists have been far less conservative about their estimates of Iranian inflation.

Steve H. Hanke of Johns Hopkins University warned recently that Iran is suffering from hyperinflation as a result of sanctions. Using data from Iran’s foreign-exchange black market, Hanke estimated that Iran’s monthly inflation rate has reached 69.6%.

On Sunday, more influential Iranian economists and lawmakers criticized the central bank’s role in the economic crisis.

News site Khabar Online, which is close to Iran’s moderate conservatives and which has openly blamed the Iranian government for mismanaging the economy, published an interview with economist Ali Pakzad, who said the central bank had published erratic financial information over the past three years.

That information was at odds with other economic indicators and statistics published by the Statistics Center of Iran, the government’s statistics and census organization, Khabar Online cited Pakzad as saying.

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Pakzad’s remarks come after the head of the Statistics Center, Adel Azar, said in August that his organization disagreed with the central bank over how it calculated the inflation rate and said the center would send its inflation reports to officials confidentially until the end of the current Iranian year.

Also on Sunday, Mohammadreza Pour-Ebrahimi, the deputy head of Iran’s parliamentary Economic Commission, accused the central bank of failing to maintain a stable currency.

Pour-Ebrahimi told Fars News, which is affiliated with Iran’s Revolutionary Guard Corps, that bank officials must stabilize the foreign exchange market, and that two of the major factors in Iran’s economic crisis were the lack of working capital and an unstable currency.

Last week, Pour-Ebrahimi accused the central bank of turning a blind eye to the large number of Iranians exchanging their savings into foreign currencies over the past few months.

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