In a new report on Thursday, the Statistical Center of Iran (SCI) announced that the inflation rate in the 12-month period ending March 20, 2020 in for foodstuff, drinking water, beverages and tobacco products passed the 42 percent mark.
The new overall inflation rate is up from 34 to 37 percent in comparison with the previous year for various subcategories according to the report.
The SCI report also set the rate of inflation in the non-food and services categories at 31.4 percent during the same period.
Since March 2019, when the Central Bank and other government offices stopped issuing economic reports, the Statistical Center of Iran is the only entity issuing sporadic economic reports.
The International Monetary Fund (IMF) says the inflation rate in Iran in 2019 was 41.1 percent and in 2020 it will hover around 34.2 percent. The main reason for such a high inflation rate is the falling value of Iran’s currency mostly due to U.S. sanctions.
The IMF in April forecast a decline by six percent in Iran's GDP. This would be the third consecutive annual decline in Iran’s GDP. In August 2018, the single-digit inflation rate in Iran began to grow and reached a record high of 42.7 in September 2019. Iran's Statistical Center claims that inflation has been slowing since then.
Worsening economic conditions have contributed to several waves of widespread protests in the country, the worst last November, when security forces used military weapons to subdue the protesters. According to a Reuters estimate up to 1,500 people were killed.
Iran is also struggling with the economic consequences of the coronavirus pandemic since late February in addition to U.S. sanctions that were re-imposed in 2018 by President Donald Trump.
The sanctions have led to a steep devaluation of the Iranian currency. The Iranian Parliament on May 4 approved a bill to slash four zeros from banknotes. Currently, 10,000 rials equal 6.5 U.S. cents and the new currency will be worth the same on the free exchange market.
During the monarchy, 10,000 rials was worth close to $150. The monetary reform -- which also scraps the rial as the national currency and replaces it with toman -- is not likely to have any effect on inflation, experts say.
Oil sanctions have been particularly damaging to the Iranian economy. The sanctions have reduced Iran's crude oil exports by around 90 percent compared with the pre-sanctions period in 2017.