Iran central bank no longer to issue inflation data

TEHRAN: The Central Bank of Iran will no longer issue monthly inflation data, an Iranian newspaper reported on Monday, saying the job had been delegated to a non-government agency.

The change comes at a crucial moment for inflation in Iran, as a phase-out of massive government subsidies has caused prices of key items to surge and fears over the value of the rial caused a rush for dollars and gold, prompting devaluation.

Jam-e Jam daily quoted Central Bank Deputy Governor Hossein Ghazavi as saying the job of collecting and publishing inflation data had been transferred to a body called the Supreme Council of Statistics.

The report did not say why the change had happened, but many Iranians are sceptical about the central bank's assessment of inflation which it put at 14.2 to for the Iranian month of Ordibehesht -- April 20-May 22 -- the last time it reported.

The index has risen steadily from a 25-year low of 8.8 percent in August 2010 but many people, including some prominent lawmakers, believe the real figure is much higher, especially since the subsidy cuts which caused gasoline prices to rise up to seven-fold, at least doubled the price of bread and caused utility bills to soar.

Keeping inflation under control is a key challenge during the abolition of subsidies worth up to $100 billion per year. The government is giving cash subsidies of 450,000 rials (about $42) per person, a measure which has gone some way to offset the hardship of higher prices but which in itself carries inflationary risks.

Ghazavi has said in the past he believes inflation can return to single digits once the subsidy reform -- has been implemented.

The cuts are aimed at reducing the wasteful use of key resources and have been applauded by the International Monetary Fund. Any huge rise in inflation, however, could put more pressure on President Mahmoud Ahmadinejad, a populist hardliner, who has made the reform a cornerstone of his economic policy.

The fear that inflation was eroding spending power was one of the key reasons behind a spike in demand for hard currency last month which led the central bank to devalue the rial by almost 11 percent.

Subject to international sanctions, aimed at forcing Tehran to curb its nuclear activities, Iranians are finding it increasingly difficult to transfer cash abroad to invest in hard currency or other assets -- another reason behind the increased demand for dollars.

The sanctions have also added to concerns about the Iranian economy -- despite government assertions that they are having no impact -- increasing consumer nervousness about inflation.

Copyright Reuters, 2011