Iran is in the grip of an inflationary shock. In the Iranian month which ended on June 21, monthly inflation stood at 12.2%—the highest such figure ever recorded. Experts had predicted that the recent subsidy reforms, which have included the discontinuation of the previous subsidized exchange rate, would have an inflationary impact.

From Apr. 2018 until March this year, Iran had used an exchange rate of 42,000 IRR per USD to import essential goods such as food and medicine. Given that the greenback fetches six times as many rials with the main exchange rate used for commercial imports, the exchange rate reform has naturally pushed up consumer prices.

Comparing the rate of inflation on June 21 to the same time in the previous year— point-to-point inflation—the figure stood at 52.5%. Meanwhile, the overall consumer price index (CPI) showed inflation of 39.4% for the preceding 12 months...