VZCZCXRO5549
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #4211 3151145
ZNR UUUUU ZZH
P 111145Z NOV 06
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 7971
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS BAGHDAD 004211 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN IZ
SUBJECT: SEPTEMBER INFLATION DATA 
 
REF: BAGHDAD 3460 
 
¶1. (SBU) Iraq's consumer price index (CPI) decreased 12.8% in 
September, and the year-on-year increase dropped to 51.6%. 
The decrease is largely driven by price decreases in the 
categories of Fuel/electricity (41.2%) and 
Transport/communication (32.6%). GOI's Central Office of 
Statistics and Information Technology (COSIT) lists 
disaggregated percentage increases (month-on-month) as 
follows: 
 
Food                       2.0% 
Tobacco/liquor             2.3% 
Clothing/shoes             6.3% 
Furniture                  3.0% 
Fuel/electricity         -41.2% 
Transport/communications -32.6% 
Medical services/medicine  0.2% 
Misc. goods/services       2.6% 
Rent                       1.3% 
 
Compared to the data from September 2005, prices grew at the 
following rates: 
 
Food                      33.3% 
Tobacco/liquor            19.4% 
Clothing/shoes            29.1% 
Furniture                 18.2% 
Fuel/electricity         165.3% 
Transport/communications 152.2% 
Medical services/medicine 21.6% 
Misc. goods/services      36.4% 
Rent                      34.7% 
 
¶2.  (SBU)  This data compares to the August month-on-month 
increase in COSIT's weighted aggregate CPI of 15.1% and 76.6% 
for the year-on-year.  The month-on-month increases for the 
previous six months are as follows: 
 
July            8.3% 
June            0.7% 
May             1.2% 
April          -1.1% 
March           1.7% 
February       13.1% 
 
¶3.  (SBU)  Despite the decrease in the CPI for the month, it 
remains unclear that real inflation has entered a slowing 
trend.  The method by which COSIT measures inflation remains 
inaccurate (see reftel) and the data may reflect seasonal 
variation due to the Ramadan holiday, during which fuel 
consumption (which factors more heavily in the weighting 
system COSIT uses) typically decreases.  Real inflation is 
likely to be sigificantly higher than indicated in the COSIT 
data.  The apparent drop in prices also follows the 
relatively high rate of inflation in August.  Additional data 
is needed before a clear trend toward deceleration emerges, 
and engaging with the GOI on the importance of inflation 
remains a high priority. 
KHALILZAD