Finance29 September, 20262 min read
Iran’s Inflation Jumps as Sanctions Reimposed After 12-Day War, IRNA Says
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Inflation surged into the mid-30s, linked to liquidity growth and currency depreciation. Economic growth contracted sharply, around a 10% year-on-year decline, signaling stagflation.
5 outlets told this the same way.
Liquidity, exchange rate, inflation
IRNA framed Iran’s inflation as a problem driven by liquidity growth, but it also said the monetary policymaker faces external shocks and uncertainty, including tightening sanctions and the return of UN sanctions tied to the 12-day and 40-day wars. IRNA said monthly exchange-rate data from Farvardin 1403 to Tir 1405 showed the free-market exchange rate rising from about 60,000 toman to 92,000 toman by the end of 1403, then changing in Khordad 1404 alongside the 12-day war. IRNA reported that after UN sanctions were reimposed in Mehr, the exchange rate rose from about 110,000 toman in Mehr 1404 to over 173,000 toman in Tir 1405, and it said this shift could not be explained solely by typical changes in monetary variables.
IRNA said the currency shock reaches inflation with a delay, noting that in Mehr 1404 annual currency growth was about 79 percent while inflation remained around 47 percent, before inflation rose to more than 62 percent in Bahman. IRNA added that the policymaker’s challenge is not only using tools such as the interest rate and money supply control, but also curbing expectations in an economy where uncertainty originates outside the money market.
Inflation history and new highs
خبرآنلاین described Iran as suffering from chronic inflation for at least half a century and said double-digit inflation over 46 years of the past 50 was one of the most important consequences. خبرآنلاین said inflation has not fallen below 30 percent since 1997 and that it has now surpassed 65 percent, while it also cited the Statistical Center of Iran calculating annual inflation at 69 percent. خبرآنلاین said inflation rose above 30 percent only in 1973 and 1974, and it contrasted that earlier period with the post-1990s era after the imposition of nuclear sanctions and the unilateral withdrawal of the United States from the JCPOA.
خبرآنلاین reported that inflation in 1979 was 11.4 percent and that inflation in 1980 reached 23.8 percent, while it also said inflation fell to 6.9 percent in 1984. خبرآنلاین said the average inflation in the 2000s reached 14.73 percent and that the highest inflation in that decade was recorded in 2008 at 25.4 percent.
Growth slump, uncertainty, and risk
دیارمیرزا News Agency reported that Iran’s economic growth in the first three months of 1405 reached negative 10.1 percent, and it linked the decline to inflation reaching unprecedented levels. دیارمیرزا News Agency said that by the end of Mordad, annual inflation reached 69 percent and month-to-month inflation 89 percent, and it described the combination as a stagflationary recession period of the half-century. the most important feature of the economy in this period is the simultaneous rise in inflation and uncertainty.
inflation is no longer solely demand-driven and a significant portion is fed by costs and supply constraints when the exchange rate, input costs, energy, transport, and financing costs rise. if oil revenues or other projected resources do not materialize, the government faces a gap between resources and expenditures, and it said he described how financing that gap can transmit financial crisis pressures to inflation and economic growth.