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Tue 5 Feb 2008 01:56 PM

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Iran inflation drops but prices continue to rise

Annual rate fell to 19.2% in January while prices rose 1.6%, fuelling discontent.

Iran's annual inflation rate fell to 19.2% in January, the central bank said, but monthly data showed consumer prices continuing to rise in the world's fourth-largest oil producer ahead of a March parliamentary poll.

The central bank said on its website that prices rose by 1.6% in the Iranian month to January 20 but that the year-on-year rate declined from the previous month's 19.6%.

The latest rate is still higher than late last year, when inflation climbed to 19.1% year-on-year in the month to November 22 from 18.1% the month before that.

Many ordinary Iranians complain of rapidly rising rents and food prices and analysts say inflation will be a factor for voters in March 14 parliamentary elections, seen in part as a referendum on President Mahmoud Ahmadinejad's policies.

Critics accuse Ahmadinejad, who came to power in 2005 on a pledge to share out Iran's oil wealth more fairly, of fuelling inflation with his government's profligate spending policies.

The government has dismissed the criticism and say the issue has been exaggerated. Iran's economy grew by 6.7% year-on-year in the March-September period, according to central bank figures released last week.

Iran has made windfall gains from the high oil price in recent years. It expects to earn about $70 billion from oil exports in the year to March 2008. (Reuters)

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