Iran’s Lying Inflation Statistics

Today, the Central Bank of Iran released its inflation statistics for 2012.  Remarkably, despite all of the international notoriety surrounding Iran’s outbreak of hyperinflation in October, the Central Bank claims that Iran experienced an annual inflation rate of only 27.4%.

The Central Bank has a habit of failing to release useful economic data, and what it does release often has what I would describe as an “Alice-in-Wonderland” quality. Indeed, the Central Bank’s official annual inflation rate is grossly off from the true rate. Using a well-established methodology, I estimate that Iran experienced an annual inflation rate of 110% during 2012.

Ever since hyperinflation briefly reared its head, back in October, the Iranian government has tried to prop up its faltering currency and stop its economy’s death spiral through force and deception.  In a sense, these oppressive tactics seem to have “worked,” as Iran’s inflation rate has fallen somewhat since it peaked in October 2012.  That said, Iran’s true annual inflation rate (110%) – which I calculated using objective, market-based data – is a whopping four times higher than the official reported rate.

The use of lying statistics is not a first for a country with hyperinflation. Indeed, when inflation begins to spiral out of control – such as the most recent cases in Zimbabwe and North Korea – it’s all too common for governments to wrap their statistics in a shroud of secrecy.

Now, this shroud of secrecy has cast its shadow over Tehran. Once again, lying statistics remain the order of the day.

Author Steve H. Hanke