Double-Digit Inflation Worsens in Iran

New York Times - By RICK GLADSTONE

Iran’s double-digit inflation rate worsened for the sixth consecutive month in March, the government said on Monday, in what appeared to be an implicit acknowledgment that international sanctions linked to the disputed Iranian nuclear program are causing some economic harm.

The government’s statistics office said the rate increased in March to an annualized 31.5 percent, compared with 30.2 percent in February and 26.4 percent a year earlier, the semiofficial Mehr News Agency reported. The Mehr report did not offer an explanation for the increase except to specify that much of it was in the categories of food, beverages and tobacco.

Many economists say the real rate could be at least double the official rate, partly because it does not fully take into account the prices of many imported goods, which have become prohibitively expensive. The main reason is the severe depreciation of the rial, Iran’s national currency, as the sanctions that have limited Central Bank activities and oil exports have taken hold.

Some experts believe the Iranian inflation calculation deliberately understates the actual rate in order to present a public face of resistance to the coercive pressures inflicted by the sanctions, which have been imposed largely by the United States and European Union.

“It’s unclear how the Iranian government calculates the inflation rate, especially given the lack of transparency and accountability within the political system, but the official rate announced by the Iranian government is politically motivated,” said Alireza Nader, an Iran specialist in Washington at the RAND Corporation.

He said the prices of some food items had increased by as much as 100 percent in recent months.

“Of course inflation was high before sanctions against the Central Bank, but there are indications that sanctions have pushed Iran’s inflation much higher,” he said. “This means a more severe economic outlook for the Iranian government, and the population’s continued loss of confidence in the Islamic Republic’s ability to keep the economy afloat.”

Proponents of the sanctions have argued that they are not meant to hurt the Iranian people, but rather to create enough pressure on the government so that it is more willing to negotiate. The sanctions advocates say they are working, as reflected in Iran’s eagerness to re-engage in talks with the major powers aimed at resolving the nuclear dispute.

Iran’s foreign minister, Ali Akbar Salehi, said last week that he was hopeful that “forward movement” would be achieved at the next round of talks on Friday and Saturday in Almaty, Kazakhstan.

Critics of the sanctions argue that despite the public Iranian expressions of optimism, there has been no sign that the supreme leader, Ayatollah Ali Khamenei, is willing to soften his hostility to what he regards as American bullying.