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Iran's leader tells govt to control inflation

TEHRAN - Iran's supreme leader called on the government of President Mahmoud Ahmadinejad to work on controlling rising prices, the main gripe among Iranians who fret about inflation now running at about 26 percent.

By (Reuters)

Published: Sun 24 Aug 2008, 1:52 AM

Last updated: Sun 5 Apr 2015, 11:57 AM

Ayatollah Ali Khamenei said the government's economic reform plan, which includes rejigging the subsidy system to involve more targeted payments, was a good step but any inflationary impact should be contained.

Khamenei, the top authority under Iran's system of clerical rule, tends to stay out of day-to-day politics but has in the past gently chided the government over surging prices although he has also voiced support for the president.

"Implementing this (economic) plan in a good manner is a big step in the country's progress but the hasty implementation of that (plan) will bring about some dangers and harm," Khamenei said in comments broadcast by state television.

"If the implementation of a part of this plan creates inflation one should find solutions to prevent this issue or control its negative consequences," he said.

State TV also quoted the leader as calling for "efforts to control inflation as it is one of the people's problems."

Inflation was running at 26 percent in July. It has climbed steadily from about 11 percent when Ahmadinejad came to power in mid-2005.

Economists say high world commodity prices have contributed but they lay most of the blame on what they say is Ahmadinejad's profligate spending of windfall oil earnings. Ahmadinejad came to power pledging to share out Iran's oil wealth more fairly.

The president in June outlined plans to overhaul the country's generous subsidy system, a move that will involve introducing more direct subsidy payments to those who need them rather than blanket subsidies on goods.

The government has already curbed subsidies on gasoline via a rationing system.

Economists have said such moves will help cut state spending and curtail waste. But they also warn of a short-term inflationary impact, a sensitive issue ahead of next year's presidential race when Ahmadinejad is expected to run again.