Iran Braces For 20-30% Utility Price Hikes

Rising energy and utility prices from 21 April will add to Iranian inflationary pressures early in the country’s New Year, which began on 21 March, and raise the price of other commodities.

Iran is experiencing stagflation despite some recent improvements in the outlook following the temporary easing of some international sanctions, the IMF said in its latest World Economic Outlook published this week.

Inflation, though down from 41% for 2012-13, will remain at over 20% for the next two Iranian years (see table). Whilst the IMF predicts modest GDP growth this year, after two years of contraction, this barely keeps pace with the country’s 1.3%/year population growth rate. Even by the end of the IMF’s forecast period in March 2016, the Iranian economy (in real dollar terms) will remain smaller than it was four years earlier at the beginning of the 2012-13 Iranian year when international sanctions began to bite. Energy price rises will be more gradual that those anticipated in the 2014-15 budget, according to Finance Minister Ali Tayyib Nia. Price hikes of around 25% will accompany the implementation of the second phase of the subsidies reform plan, Iran’s First Vice President Ishaq Jahangiri says. (CONTINUED - 918 WORDS)

DATA INSIDE THIS ARTICLE

table Iran Selected Indicators: 2011-16* ($Bn)