TEHRAN, (Reuters) – Iran’s annual inflation rate jumped 1.8 percentage points in September to 29.4 percent, Iranian media said on Thursday, highlighting a growing source of discontent ahead of next year’s presidential election.
Rising prices and the economic policies of President Mahmoud Ahmadinejad are likely to be major issues in the June 2009 election when Ahmadinejad is expected to run for a new four-year term as leader of the world’s fourth-largest oil producer.
“Inflation on the verge of 30 percent,” business daily Sarmayeh said in a front-page headline.
Consumer prices rose 3.9 percent in the Iranian month that ended on Sept. 21 from the previous month, pushing up the year-on-year rate to 29.4 percent from 27.6 percent, newspapers said, quoting central bank data.
Inflation has been steadily rising from about 11 percent since Ahmadinejad came to power in 2005 on a pledge to share out the Islamic Republic’s oil wealth more fairly.
The ISNA news agency said some experts believed the latest price surge was in part due to the Muslim fasting month of Ramadan, when some foodstuffs usually become more expensive. Many Iranians invite guests for breaking the fast in the evenings during Ramadan.
Other countries in the Middle East, including Egypt and Saudi Arabia, also struggle with double-digit inflation rates.
Economists say Iranian inflation has been fuelled by heavy government spending of petrodollars.
The president has dismissed the criticism, saying rising prices are a global problem and that his government is tackling the issue. Earlier this week he said inflation was decreasing.
New Central Bank Governor Mahmoud Bahmani was last week quoted as saying he would inject $15 billion into the banking system to help boost industrial production, a move economists warned could further stoke price rises.
Analysts have said the previous governor, Tahmasb Mazaheri, was replaced in September because he was seeking to tighten credit, while the government was pushing for looser policy.
Iran, which is under U.N. and U.S. sanctions over its disputed nuclear programme, has been reaping windfall gains from its oil wealth in recent years.
But analysts say surging imports have made it more sensitive to any declines in the price of crude, which has tumbled about $60 a barrel from a peak of $147 in July.
The International Monetary Fund said on Wednesday the Middle East had dodged fallout from the global credit crunch but still had problems stemming from overheating domestic economies.