Iranian leader calls for containing inflation

Iran's Supreme Leader has 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 per cent.

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 per cent in July. It has climbed steadily from about 11 per cent 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 subsidy system, a move that will involve introducing more direct subsidy payments rather than blanket subsidies on goods.