Tuesday March 11, 2008

Iran inflation surges to 19.6%, highest pace in 8 years

bloomberg.com :

Iran, the world's fourth-largest oil producer, is facing gasoline shortages, as well as youth unemployment of 21% and U.S. economic sanctions. President Mahmoud Ahmadinejad has responded by imposing gasoline rationing, boosting subsidies and raising government spending, sending inflation to its highest annual pace in eight years, accelerating to 19.6% in December 2007, up from 10.9% in the month after Ahmadinejad took office in August 2005.

The president has used Iran's oil riches to boost his political support. Spending on subsidies for items such as sugar, wheat and cooking oils has increased by more than 50% since 2005. The IMF, in its annual review of Iran's economy, called for "phasing out energy subsidies" and stressed "the importance of addressing the numerous distortions stemming from the extensive controls on prices." Iran's oil refineries, which were badly damaged during the 1980-88 war with Iraq, are unable to meet the country's needs: it must import about 40% of its gasoline. Iran pays 52 cents for an imported liter that it sells for about a fifth of that price under the government-run rationing program.

- The particular circumstances for each country may vary but globally, the same thing is happening everywhere - rising inflation in all countries, whether they are resource producers or goods manufacturers, or consumers, or a mixture of both.

(2008-03-11 12:47:55 SGT) [Biz] Permalink

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