Identifier
Created
Classification
Origin
05BAGHDAD3163
2005-07-31 16:18:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Baghdad
Cable title:  

IRAQI CONSUMER PRICES ROSE 5.7 PERCENT IN FIRST

Tags:  ECON EFIN IZ 
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UNCLAS BAGHDAD 003163 

SIPDIS

SENSITIVE

STATE PASS USAID

E.O. 12958: N/A
TAGS: ECON EFIN IZ ECON
SUBJECT: IRAQI CONSUMER PRICES ROSE 5.7 PERCENT IN FIRST
HALF 2005


This cable is sensitive but unclassified. For government
use only. Not for internet distribution.

UNCLAS BAGHDAD 003163

SIPDIS

SENSITIVE

STATE PASS USAID

E.O. 12958: N/A
TAGS: ECON EFIN IZ ECON
SUBJECT: IRAQI CONSUMER PRICES ROSE 5.7 PERCENT IN FIRST
HALF 2005


This cable is sensitive but unclassified. For government
use only. Not for internet distribution.


1. (SBU) SUMMARY: Consumer prices increased modestly
during June by 1 percent and prices are up 5 percent for
the first half of 2005. The 12-month inflation rate -
from July 2004 through June 2005 - rose slightly to 37
percent. Consumer prices may increase more rapidly in the
second half of 2005 if conditions in 2004 are repeated
when consumer prices rose approximately 30 percent from
July through December. END SUMMARY.


2. (SBU) The Ministry of Planning's consumer price index
indicates that the general level of prices increased 1.0
percent in June following a decrease of 2.1 percent the
previous month. The Iraq consumer price index increased
5.7 percent in the first six months of 2005, up from only
1.5 percent in the same period of 2004. Relative to
twelve months earlier, the price level in June had
increased 37 percent.


3. (SBU) After an inflation spurt in January this year,
the level of prices fell in February, and through June,
held steady about 40 percent above the December 2003
price index. A similar pattern occurred in the first half
of 2004 but then the price index jumped some 48 percent
from June 2004 through January 2005.


4. (SBU) Percent changes in components of the COSIT
consumer price index relative to the preceding month and
a year earlier are presented in the following table. It
also records weights for each commodity class used in
calculating the index. In June there was a decline in
Fuel/electricity prices but a 76 percent increase
relative to a year earlier. The weight for this category
in calculating the index is only 2.1 percent. There were
substantial increases in prices of Furniture, Medical
services, and Miscellaneous items in June, each of which
also has a comparatively low weight in the consumer price
index. Relative to twelve months earlier, both Food and
Rent, which are heavily weighted, increased about 38
percent, nearly the same as the 37 percent increase in
the overall index.


Item % Increase/(Decrease)
One Month 12 Months Weight

Tobacco/alcohol 0.5 (0.9) 3.5
Clothing, fabric, shoes 0.0 10.7 9.7
Fuel/electricity (5.9) 76.4 2.1
Transportation/communications 0.2 55.1 4.9
Food (0.2) 37.6 63.2
Furniture 4.2 9.8 3.1
Medical services 4.0 11.8 1.5
Rent 2.6 37.8 11.5
Miscellaneous 3.1 26.8 0.5

All items 1.0 37.2 100.0

--------------
COMMENT
--------------

5. (SBU) COMMENT: Monthly Iraq CPI statistics through
June show a comparable leveling to what was observed in
the first half of 2004. That the consumer price index
increased over 5 percent in the first half of 2005
compared with only 1.5 percent during the comparable year
earlier period raises concern about inflation,
particularly should substantial increases in inflation
that occurred in the last half of 2004 be repeated this
year. END COMMENT


Khalilzad