Speaking in the first national conference of Qarz Al-Hasaneh (Loan without interest) in Tehran, Ehsan Khandouzi said that the main task of the government and the Central Bank for next year is to reduce the inflation rate comparing to this year and expressed hope the forex market faces lower fluctuation next year due to handing over authorities to the bank.

He went on to say that while the banks have more than a five percent delay in payments, this rate in “loan, Without Interest from the banks of the Islamic Republic of Iran is half a percent, which is lower than the common rates in the world.”

“Loan, Without Interest’, as a recommended duty in Islam, has always had a special place in the economic cycle of the Islamic Republic of Iran,” he added.

The first national conference on “Loan, Without Interest”, titled “Explaining the position of loan, without interest in Iran’s economy,” was held on Sunday with the presence of the Minister of Economy and other central bank officials.

Khandouzi while referring to the inclusiveness of banking as one of the pillars of justice in the country, said: any part of the economy that is more efficient will benefit from the loan, and with more transparency in this matter, the society will also trust it.

He once again called for popularizing the economy and more participation of the public and said that economy whose roots do not return to the public support will  not remain sustainable and sustainability of economy is the outcome of the public participation in the economic activities and social progresses of the people. He noted that one of the strategies of the government is to strengthen the dimensions of social justice and people’s economy.

Khandouzi also urged Majlis not to increase the ceiling of the budget and it will lead to interaction between Majlis and the government and it will help the government to control the engine of inflation like the past year.

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On Tuesday and answering questions of ILNA, Ehsan Khandouzi said that the inflation rate is gradually coming under control and current international reports and economic indicators bespeak of Iran’s inflation is slowing down.

He reiterated that despite the rise in price of dollar all economic indicators are in favor of decrease in inflation rate.

He went on to say that according to the approval of Money and Credit Council, bank interest rate is to increase and the approval has been announced by the Central Bank. He added that there are different interest rates for the short and long term deposits which is to be implemented this year.

Khandouzi also pointed to the meetings of Anti-Money Laundering High Council in almost recent 16 months, and said the number of meetings in this period has been almost four times more than the number of meetings during the previous government and today one sees developments in activities of this council.

He reiterated that the main goal of this council is to minimize money supply for smuggling and tax evasion.

He went on to say that Iran has reached good agreements with neighboring states especially EEU states for financial data and information and all activities of the council in the past 16 months will soon show its signs in the country for preventing financial crimes.

He reiterated that the move of the country and council is not for pleasing the foreigners and all decisions are regulated based on the domestic financing.

Khandouzi noted that these measures and actions should have been taken years ago, noting that joining the FATF is waiting for the Expediency Council decision.

He went on to say that some directives have been prepared for using bitcoins and exchange of goods and purchasing foreign goods with bitcoins.

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Ali Salehabadi said that there are several factors in inflation and one of them is the supply and cost that for example global prices cause it. He added that when the global prices rise, it causes rise in inflation and it can increase the costs. He noted that the other factor is demand which is mostly because of liquidity and the other factor is expectations.

He then elaborated the programs of the central bank for curbing the growth of the liquidity. He reiterated that the liquidity growth will decline to below 30% by the yearend as the monetary base in last Iranian calendar month was 20.5% and the economic growth was 20.2%, and it is expected the liquidity growth will be less than 30% before the yearend.

Salehabadi then touched upon the details of the increase in capitals of the banks and said that this increase is because of selling shares. He also said that the producer price index when President Raisi took office was 82.6% and it has now fallen to 39.1% and even point-to-point index was 103% in May that it has decreased to 32.9% and it will increase more by the yearend.

He said that next year three factors will be ineffective on the inflation trend and therefore liquidity, monetary base and inflation will see a downward trend next year.

He also touched upon the rise in the forex price and devaluation of national currency and stressed that the current dollar price in the free market is unreal adding that the country has no problem in earning forex, and the market has not faced with distribution of forex.

Salehabadi stated that one of the reasons in devaluation of the dollar in Iran is the rise in the value of dollar in the world and the other main reason is because of incidents and expectations in the country and market and actually excitement in the market which have increased the price of forex and it is unreal.

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Khandouzi said that inflation rate cooled down last month considerably, expressing hope that the rate would lower in the current month. He added that official statistics show that the long term routes of economy are under control.

He also reported improving the country’s foreign trade, including the 40 percent increase in goods transit.

Khandouzi told reporters that there was no increase in exports and imports in terms of volume and weight, but the higher value-added of the exports increased.

Regarding the customs clearance, the minister said that with the current administration’s order, more than 1 million tons of goods were cleared out of 1.250 million tons.

He reiterated that the country has witnessed 16% rise in imports and 22% in exports and this bespeaks economic trend is improving.

Meanwhile, the Governor of the Central Bank of Iran (CBI) said that the body has agreed with the Ministry of Industry, Mine, and Trade on a mechanism to use cryptocurrencies to import goods.

In response to a question about using cryptocurrencies in foreign trade, Ali Salehabadi said that last year it was agreed those who had legally-mined cryptocurrencies could offer them to be used for imports.

Salehabadi also said that about $14 billion in currencies were supplied for the country within the first four months of the (Persian) year, which increased up to 80 percent ($706 billion) compared to the similar period last year.

Daily, he added that more than $10 million were being traded in the agreement market between currency exchange offices, a good anchor to keep the market stable.

On Tuesday, a top Iranian trade official says a first import order using cryptocurreny as a payment method has been registered in the country.

Alireza Peyman-Pak, a deputy Iranian trade minister, said on his Twitter page that the official import order was worth some $10 million.

Peyman-Pak leads Iran’s Trade Promotion Organization (TPO), a body responsible for registering and processing orders for imports into the country.

The official did not elaborate on more details about the order, including the country from which the import will take place and which cryptocurrency will be used to settle the payment.

However, he said that the use of cryptocurrencies in Iran’s foreign trade will be expanded significantly until September.

The post Inflation Rate Falls Considerably Last Month appeared first on Iran News Daily.

The consumer price index (CPI) rose by 1.1% in urban regions to 40% and by 1.4% for households living in the countryside to 43.2%, showed the statistics.

The figures showed, however, that there was a major decrease in the month-on-month inflation rate as the monthly CPI was down by 7.6% against June to stand at 4.6%.

That comes after consumer prices rocketed to all-time highs in June after the government introduced economic reform policies and removed subsidies given to the staple food and some other goods.

The official IRNA news agency said in an analysis that the decrease in monthly inflation meant that shocks caused by food price hikes in June were over despite claims by government critics that removing subsidies would lead to persistent inflation in Iran.

SCI’s Saturday figures showed that CPI calculated on a point-to-point basis, which compares prices with the same month last year, had increased to record levels.

The data showed that point-to-point inflation rate had risen by 54% against July 2021, down 1.5% from the same figure reported in June.

Iran has seen high but controlled levels of inflation in recent years mainly because of economic shocks caused by US sanctions on its oil exports and also because of business closures ordered by the government to contain the coronavirus pandemic.

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SCI has put the country’s point-to-point inflation rate at 35.9 percent in the tenth month of this year, which means families have paid an average of 35.9 percent more for purchasing the same package of commodities and services in that month, compared to the same month in the previous year.

The point-to-point inflation rate has risen 0.7 percent in comparison to the figure for the preceding month.

The point-to-point inflation rate for urban households was reported to be 35.8 percent, which is 0.8 percent more than the figure for the previous month. The figure was 36.5 percent for the rural households, with 0.3 percent rise from the figure for the previous month.

The Statistical Center of Iran had put the inflation rate in the twelve-month period ended on March 20, 2021 (the end of the previous Iranian calendar year) at 36.4 percent, rising 2.2 percent from the figure for the twelve-month period ended on the last day of the preceding year.

In late November 2021, the head of Iran’s Budget and Planning and Budget Organization (PBO) had said, “Considering the recent data provided by the Statistical Center of Iran (SCI) the inflation is expected to be curbed in the next Iranian calendar year (begins in March 2022).”

“No Money creation has taken place in the last three months, and a recent report by the Statistics Center of Iran shows that inflation is declining, these are indications that the inflation could be curbed by the next year,” Masoud Mir-Kazemi said at the time.

Referring to the current economic problems, the PBO head stated: “The problem of people today is livelihood, business situation, household income, and inflation, and solving problems in these areas is one of the tasks of the Planning and Budget Organization. Over the three-month, since the 13th government took office, PBO’s priority has been economic stability to restore confidence in the economy.”

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“The government’s currency income increased threefold in the first five months [March 21-Oct 22] of the current fiscal year compared to the same period last year,” Ali  Salehabadi told state TV.

Pointing to pattern of forex repatriated by exporters in the period, he said currency deals between exporters and importers through the Nima platform reached $16.5 billion in seven months. This was almost double the amount on last year.

“This is while forex trade in the whole of last fiscal year [ended in March] was $16.7 billion. This shows that we have made progress in augmenting currency income.”

He reiterated that the CBI is managing the forex market but it does not sell forex and this is the exporters themselves who offers repatriated fore from exports in the market.

He noted that in case of emergency, the CBI may step into market but it does not intend to use its forex sources in the market.

Salehabad went on to say that the price of the forex depends on several economic factors and the CBI as a balancer can enter the forex market but the forex resulted from exports and its return to the market will boost economy.

He reiterated that protection of national currency value depends on inflation rate and other economic factors. He also blamed the lack of balance in banking resources as the other factors behind inflation.

He claimed the inflation rate dropped to 6.7 percent last month and the point-to-point inflation is decreasing.

Meanwhile data released by the Central Bank of Iran show the reserve requirement of banks increased more than twofold in three years.

The legal reserves rose from 154 trillion rials ($570 million) in fiscal 2017-18 to 354 trillion rials ($1.3 billion) by the end of the last fiscal year (March 21) up 129%.

Funds held by banks as reserve with the CBI stood at 194 trillion rials ($718m) in 2018-19 and 260 trillion rials ($962m) in 2019-20, respectively, showing annual growth of 26% and 33.7%.

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This is the highest annual inflation rate in Iran since 1995, when the inflation rate peaked at 49.4 percent.

The Statistical Center of Iran says inflation in food items was much higher than other items and services.

The annual inflation of food and beverage items reached about 52 percent in June.

Among this group of commodities, the highest price growth was related to edible oil, which grew about 70 percent and was in the next category of red meat, fruit and vegetables.

Of course, these figures are related to the annual inflation rate, i.e. price growth in the 12 months ending in June compared to the same period a year ago, but the increase in prices in June itself is much higher than in June (point-to-point inflation) last year.

For example, the increase in the price of edible oils in June of this year was about 113 percent compared to last June, more than twice as much as last year. Also, the price of bread and cereals grew by nearly 51 percent and red meat inflation was about 70 percent.

The inflation rate of all goods and services in the country also reached 47.6 percent in June.

Iran’s inflation last year was 36 percent and will peak at 39 percent this year, according to its assessment by the international body.

In the main group of “foods, beverages and tobacco” the highest price increase compared to the previous month was related to the group “vegetables” (tomatoes, potatoes and eggplant), the group “fruit and dried fruits” and the group “sugar, sugar and sweets” (pasteurized ice cream, candy and sugar).

In the main group of “non-edible goods and services”, “clothing and footwear”, “miscellaneous goods and services” group (18 ct gold and paper towels) and “hotel and restaurant” group (foods served in restaurants) had the highest price increase compared to the previous month.

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SCI has put the country’s point-to-point inflation rate at 46.9 percent in the mentioned month; it means that the families have paid an average of 46.9 percent more for purchasing the same package of commodities and services compared to the same month of its previous year.

The point-to-point inflation rate was 2.6 percent less than the figure for the previous month.

At the same time, the point-to-point inflation rate for urban households was reported to be 46.1 percent, which is 2.7 percent less than the figure for the previous month.

Back in April, SCI had put the inflation rate at 36.7 percent in the urban areas of Tehran province in the last month of the past Iranian calendar year (ended on March 20). The center put the figure at 35.8 percent in the rural regions of the province.

The SCI announced that the inflation rate has risen 0.6 percent in the country’s urban areas in the last month of the past year.

The center has announced that the inflation rate in the twelve-month period ended on March 20, which marks the end of the last month of the past Iranian calendar year, stood at 36.4 percent, rising 2.2 percent from the figure for the twelve-month period ended on the last day of the eleventh month of that year.

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