Commentary

Letter to the Editor: Iran’s Annual Inflation Rate Is 82.5%

Dear Sir,

In Wednesday’s FT (“Iran warned on food security,” April 3), Najmeh Bozorgmehr reports Iran’s official annual inflation rate as 28.7 per cent. This statistic does not reflect the most recent official annual data — an inflation rate of 31.5 per cent. That said, this number is still well below Iran’s actual inflation rate. Indeed, it represents what I would call a “lying statistic.”

Since September 2012, I have been estimating Iran’s inflation rate using a standard, widely-accepted methodology. By measuring changes in the black-market (read: free-market) IRR/USD exchange rate, it is possible to calculate an implied inflation rate.

When we do so, a much different picture emerges. Iran’s inflation briefly peaked at hyperinflation levels, on 17 October 2012, with an annual inflation rate of 204.7 per cent. Currently, Iran’s annual inflation rate is actually 82.5 per cent — a rate more than double the official rate.

Steve H. Hanke is a professor at The Johns Hopkins University in Baltimore, MD, and a Senior Fellow at the Cato Institute.