According to the Statistical Center of Iran, Iran’s annual inflation rate in 2021 was 43.4 percent, but President Ebrahim Raisi is committed to lower inflation in 2022, as excessive inflation damages the economy and can fuel political instability. The regime’s capacity to control pricing is influenced by a number of issues, the most important of which are US sanctions, which have restricted the regime’s access to hard money and worldwide trade.
The 12-month average inflation rate for 2021 was 43.4 percent, up 12.9 percentage points from 30.5 percent in 2020. The global recession of 2020 and the widespread inflation of 2021, both brought on by the COVID-19 pandemic, contributed to the global and Iranian inflation rate instability.
However, due to a variety of circumstances, including weaker US sanctions enforcement and increasing Iranian export revenue, inflation in Iran has decreased slightly in recent months. Despite this, the Raisi administration is optimistic that the worst of the inflation may be passed. Raisi has made inflation control a cornerstone of his economic policy, and has submitted a contractionary budget to the Majles, or parliament, as a result.
Tehran’s capacity to control inflation in 2022, however, is largely dependent on the outcome of continuing nuclear talks, which could result in the easing of US sanctions, as well as the regime’s fiscal and monetary discipline. The penalties have a number of effects on inflation. Sanctions, for starters, limit Iran’s ability to export commodities and create income. Second, sanctions raise the cost of Iranian imports. Third, they restrict Tehran’s access to export revenue and foreign exchange reserves.
Furthermore, if sanctions are maintained, they imply that more trouble is on the way, raising market inflation expectations. By addressing other issues that drive up prices, the Raisi administration may be able to reduce inflation marginally in the short term. However, unless the sanctions issue is resolved, inflation will continue to rise.
Having the financial and monetary discipline to pursue a contractionary strategy can help to keep inflation under control. Raisi may achieve this through limiting spending, reducing Iran’s fiscal imbalance, and refraining from depressing interest rates. However, this mission is more difficult than it appears, as it risks triggering a recession and pitting Raisi against powerful pressure organizations, constituencies, and ideological forces. It may cause political upheaval as a result of this. Navigating this minefield demands political and technocratic expertise, which Raisi and his team are unlikely to possess.
Increased tax income, for example, is one approach to reduce the deficit, but taxing an already destitute population is difficult and risky. Furthermore, because large politically connected players in the economy pay little or no tax, key sources of potential revenue are essentially off-limits. Various foundations, such as Astan Quds Razavi, which Raisi used to run, are among these actors. The president, who is expected to succeed Ayatollah Ali Khamenei, Iran’s 83-year-old supreme leader, is unlikely to question significant figures and institutions and force them to pay their taxes.
If Raisi is unable to obtain complete or partial sanctions relief and does not implement disciplined fiscal and monetary policies, inflation will likely linger above 40%. Alternatively, if he is successful in obtaining full or partial sanctions relief and implements a contractionary strategy during the next year, he will be able to lower inflation by the end of 2022.
For the time being, Raisi appears to be attempting to impose monetary and fiscal discipline, as well as to deploy sanctions-busting techniques to keep inflation at bay. However, Khamenei will finally decide the fate of Iranian inflation in 2022. He will be the only decider on whether or not to reach an agreement with Washington that places substantial constraints on Tehran’s nuclear program in exchange for respite from sanctions.
What causes Iran’s inflation?
The currency rate (with a one-season lag) and effective tariffs are the main drivers of inflation in Iran (with two seasons lag). Following a 1% increase in the exchange rate and effective tariff, domestic inflation rises by 2.4 and 1.5 percent the following season and two seasons later.
In Iran, what is the poverty rate?
In 2018, the poverty rate in Iran was 0.5 percent, up from 0.4 percent the previous year. What is the current poverty rate? The fraction of the population living on less than $1.90 per day at 2011 international prices is known as the population below $1.90 per day.
What is the inflation rate for 2021?
The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. This suggests that the dollar’s purchasing power has deteriorated in recent years.
What country has printed an excessive amount of money?
Zimbabwe banknotes ranging from $10 to $100 billion were created over the course of a year. The size of the currency scalars indicates how severe the hyperinflation is.
In 2021, which country will have the lowest inflation rate?
Japan has the lowest inflation rate of the major developed and emerging economies in November 2021, at 0.6 percent (compared to the same month of the previous year).
What is Syria’s inflation rate?
From 1957 to 2021, the inflation rate in Syria averaged 11.72 percent, with a peak of 139.46 percent in August 2021 and a low of -31.05 percent in September 2014.
What is the inflation rate in China?
Inflation in China was 2.42 percent in 2020, down 0.48 percent from 2019. In 2019, China’s inflation rate was 2.90 percent, up 0.82 percent from 2018. The annual inflation rate in China was 2.07% in 2018, up 0.48 percent from 2017. In 2017, China’s inflation rate was 1.59 percent, down 0.41 percent from 2016.
What is the greatest inflation rate ever recorded in the United States?
The highest year-over-year inflation rate recorded since the formation of the United States in 1776 was 29.78 percent in 1778. In the time since the CPI was introduced, the highest inflation rate recorded was 19.66 percent in 1917.