Central bank: Inflation cancels out Iranian subsidy payments
Azerbaijan, Baku, April 18/Trend M. Moezzi
The Central Bank of Iran has warned against high inflation neutralizing any positive effect the country's targeted subsidies program could have, Fars news agency reports.
In an official report analyzing Iran's targeted subsidies reform law and its effect on people's lives, the central bank says the law has made little improvement in families' annual cost of living.
Currently every Iranian receives 455,000 rials, about $37 (USD), every month as compensation for it program to end subsidies for some commodities and energy carriers launched late in 2010.
Recently, the Iranian government transferred 280,000 rials, about $23, to Iranians' accounts for the second phase of the program without approval from the Majlis (parliament).
But in its report, the central bank says the cash subsidy doesn't much affect the real expense of higher income levels of society, and can only neutralize the current costs of inflation.
On the other hand those with lower incomes are dependent on the cash subsidies to help meet their needs because of severe income limitations.
The bank's report says this gap between classes will continue as long as the targeted subsidies program's payments only compensate people for the price hikes brought about by the inflation caused by the program itself.
In the last two years, workers' salary increases have been less than the inflation rate, reducing their quality of life.
Earlier, the central bank put Iran's year-end inflation rate (Iran's solar year ended on March 19) at 21.5 percent. That figure was 9.4 percent higher than the previous year.
The CPI index was 21.8 percent higher than the same time last year.