Cash subsidies account for 7 percent in Iran’s inflation rate

Iran Materials 20 December 2011 15:22 (UTC +04:00)

Azerbaijan, Baku, Dec. 20/ Trend M. Moezzi

Iran's targeted subsidies program has only added 7.3 percent to the country's inflation rate over the past year, Fars News quoted Iran's economic minister as saying at a gathering,

In 2010, the inflation rate was 12.5 percent for the 12 months ending in the Iranian month of Aban. This year the inflation rate is 19.8 percent, meaning the targeted subsidies have only added 7.3 percent to the inflation rate, Seyed Shamseddin Hosseini, Iran's Minister of Economic and Labor Affairs said at a conference on the first anniversary of the law's implementation.

While some experts predicted the inflation rate would rocket to 70 percent with the targeted subsidies program's launch, Iran's government projected a 13 percent increase in the inflation rate, Hosseini said. He went on to say that last year import prices rose 20 percent because of world inflation and this has been partly responsible for Iran's inflation rate.

Iran has not experienced an economic downturn as predicted by some experts and its economic growth rate in the first six months of the current Iranian year will match the same period for last year.

The subsidy reform plan launched in December 2010, allows the Iranian government to gradually slash aids on fuel, electricity and certain goods over the course of five years, with low-income families being compensated with direct cash hand-outs

According to an IMF report, the inflation rate will rise to 22.5 percent by the end of 2011