According to statistics, the inflation rate in Iran for the year 2023 has been reported as 42.5 percent. It is expected that the inflation rate will decrease to 35 percent in the upcoming year 2024 and further to 25 percent in 2025.

According to IDEA Translation Unit and citing ‘Statista,’ Iran’s inflation rate began to rise in 2019 and reached 34.62 percent. This figure was reported to be around 36.44 percent in 2021. It was predicted that due to the U.S. sanctions, inflation would increase by another 14 percent. Iran’s inflation reached a peak in 2022 at 48.96 percent.However, it is anticipated that Iran’s inflation will take a downward trend in the coming years, namely 2024 and 2025, and decrease.

Economic Consequences of High Inflation

High inflation leads to higher interest rates. An increase in interest rates reduces borrowing. Less borrowing implies less investment and a decrease in economic growth. Decreased economic growth often leads to higher inflation, a phenomenon economists refer to as the “inflation spiral.” Thus, until inflation returns to manageable rates, Iran will face challenges in achieving significant Gross Domestic Product (GDP) growth.

Prediction of Iran’s Inflation

In the provided chart, Iran’s inflation rate for the year 2023 is reported as 42.5 percent. It is expected that the inflation rate will decrease to 35 percent in the following year, 2024, and then to 25 percent in 2025. The inflation rate is projected to remain constant at 25 percent from 2025 to 2028.

On the other hand, the recent report from the International Monetary Fund (IMF) indicates that after achieving a 2.5 percent growth in 2022 AD (1401), Iran’s economy will experience a 2 percent growth in the years 2023 and 2024 AD (1402 and 1403), which is lower compared to the global average economic growth, Middle Eastern countries, and emerging economies of the region.

However, the high economic growth predictions for countries such as India and China, as major energy and oil consumers, could serve as positive indicators for Iran’s prospects in oil, energy, and overall trade with these countries. We have recently witnessed the enhancement of Iran’s relations with these countries under regional trade agreements like the Shanghai Cooperation Organization and the Eurasian Customs Union. It is expected that in the year 2023 AD, global inflation rates will show a downward trend in more than 76 percent of the world’s economies, with lower figures compared to the previous year. In the meantime, inflation in many Middle Eastern countries, including Iran, is also predicted to decrease.