Iraq : Price increases continue

Inflation, measured year-on-year, of the consumer price index reached 8.2% and 6.8% respectively in September and October 2021. Since last December, it has been trending up sharply. On average, over the first 10 months of the current year, it stands at 6% against 0.4% in 2020.

The rise in prices since last December has been fueled by a first factor: the 23% devaluation of the Iraqi dinar against the US dollar, which automatically feeds inflationary pressures in 2021 due to the resulting increase in the cost of imports.

In particular, the increase in the price of imported refined products is reflected in the price paid by transport users. The “transport” item is thus one of the main contributors to the inflation observed since the start of the year (+ 14.5%).

Added to the effect of the devaluation is that of the health crisis, which leads to an increase in demand for health goods and services, and therefore in prices observed in this sector (+ 12.8%).

But the exceeding of the 5% inflation threshold from April is also explained by increases in “Culture and leisure” (+ 9.0%) and “Various services” (+ 11.4%) items. This increase is the result of a diffusion effect and the strong recovery in these sectors with the easing of health constraints in 2021.