Iranian minister says inflation can be tamed

Iran's new economy minister yesterday said inflation, which has rocketed up and prompted public criticism of the government, could be curbed but not completely tamed in a year.

Shamseddin Hosseini was speaking to Iranain parliament Majlis just before lawmakers voted to back his appointment.

His predecessor, Davoud Danesh-Jafari, left the cabinet in April with a parting shot at government policies that he blamed for stoking price rises.

"I believe that inflation is not a problem that can be solved in one year. But with good planning the flames of inflation can certainly be reduced in a few months," Hosseini told parliament members in an address carried live on state radio.

He did not go into details on policy plans.

"Despite the many problems that exist, the capacities and capabilities of the country is such that we can solve all those problems hand-in-hand," Hosseini added.

Inflation, now around 26 per cent, has climbed steadily from around 11 per cent since President Mahmoud Ahmadinejad took office in 2005 from liberal Mohammed Khatami with a pledge to share out Iran's oil wealth more fairly.

Iranian economists and Ahmadinejad's critics said the government's profligate spending of windfall revenues from crude exports is the main culprit.

Other big oil producers in Gulf Arab states also face rising inflation, but do not match Iran's levels.

Price rises are a major gripe for Iranians and the economy is likely to be a key battleground for Ahmadinejad if, as expected, he seeks re-election next year.

However, political analysts say whether he retains the support of Iran's ruling establishment may be a more decisive factor in securing victory in the presidential vote. Hosseini was backed by lawmakers, who have to approve cabinet appointments. But even supporters said inflation was the real worry that needed to be dealt with.

"As you know, inflation is considered to be our country's most major economic obstacle and has imposed heavy pressure on the poor citizens," MP Bahman Mohammadyari said while backing Hosseini.