April 4, 2013 8:46AM 

# Iran’s Inflation Statistics: Lies, Lies and Mehr Lies 

By [Steve H. Hanke](https://www.cato.org/people/steve-h-hanke) 

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The Mehr News Agency is now reporting that Iran’s annual inflation rate has reached 31.5%. According to the Central Bank’s official line, Iran’s annual inflation rate [has bumped up only 1.3 percentage points](http://www.nytimes.com/2013/04/02/world/middleeast/irans-double-digit-inflation-worsens.html?src=recg) from February to March.

Never mind that this official inflation statistic is well below [all serious estimates of Iran’s inflation](https://www.cato.org/publications/commentary/panic-persia-hyperinflation-hits-iran). And yes, Iran’s official inflation statistics are also contradicted by the overwhelming body of anecdotal reports in the financial press.

[Since September 2012](https://www.cato.org/publications/commentary/iran-down-not-out), I have been estimating [Iran’s inflation rate](https://www.cato.org/blog/hyperinflation-has-arrived-iran) – which briefly reached [hyperinflation](https://www.cato.org/publications/working-paper/world-hyperinflations) levels in October 2012 – using a standard, [widely-accepted methodology](https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2009/5/cj29n2-8.pdf). By measuring changes in the [rial’s black-market (read: free-market) U.S. dollar exchange rate](https://www.cato.org/blog/value-iranian-rial-hits-all-time-low), it is possible to calculate an implied inflation rate for Iran.

When we do so, a much different picture of Iran’s inflation emerges. Indeed, Iran’s annual inflation rate is actually 82.5% – a rate more than double the official rate of 31.5% (see the accompanying chart).

![Media Name: inflation_rates_-_iran.png](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/inflation_rates_-_iran.png?itok=3e93VGiX) 

As I have documented, regimes in countries undergoing severe inflation have a long history of [hiding the true extent of their inflationary woes](https://www.cato.org/blog/north-koreas-economic-outlook-cloudy-chance-statistics). In many cases, the regimes resort to underreporting or simply fabricating statistics to hide their economic problems. And, in some cases, such as [Zimbabwe](https://www.cato.org/blog/zimbabwes-four-year-anniversary-hyperinflation-growth) and [North Korea](https://www.cato.org/blog/north-koreas-hyperinflation-legacy), the government simply stops reporting economic data altogether.

Iran has followed a familiar path, failing to report inflation data in a timely and replicable manner. Those data that are reported by Iran’s Central Bank tend to possess what I’ve described as [an “Alice in Wonderland” quality](https://www.cato.org/blog/irans-lying-inflation-statistics) and should be taken with a grain of salt.

##### Related Tags 

[Inflation](https://www.cato.org/inflation), [Iran](https://www.cato.org/iran) 

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