TEHRAN – The implementation of the second phase of the subsidy reform plan will not lead to a sharp rise in the inflation rate, an advisor to the Iranian president said.
Although fuel prices rose by 600 percent in the first phase of the plan, but the inflation rate increased by 10 percent, Mohammad Kordbacheh said in an interview which was published by ISNA news agency on Sunday.
“Fuel prices are planned to be increased by 60 percent on the average. Therefore, it will not lead to a hike in the inflation rate.”
A clause in the budget bill for next fiscal year, which started on March 21, calls for steep price increases to save 630 trillion rials ($25.3 billion at the official exchange rate) annually in subsidy payments.
In February, the Iranian parliament (Majlis) approved a bill that obliges the administration to take all the necessary measures by the end of spring and start the second phase of the plan in the first month of summer.
The subsidy reform plan pays 45,500 rials (about $18) to Iranians, eliminating subsidies for fuels and some commodities.
The Central Bank of Iran put the inflation rate for the 12-month period ended the last Iranian calendar month of Esfand at 34.7 percent, a 5.7 percent fall compared to the figure corresponding to the sixth calendar month of Mehr (ended on October 22, 2013).
Iranian Finance and Economic Affairs Minister Ali Tayyebnia has said the country’s inflation will fall below 15 percent in the current Iranian calendar year.