Iraq inflation stays low as dinar holds steady and jobless rate falls

Shafaq News – Baghdad

Iraq is experiencing a rare phase of “price prosperity” marked by low inflation, stable exchange rates, and falling unemployment, the financial adviser to the prime minister revealed on Thursday.

Speaking to Shafaq News, Mudhhir Mohammed Saleh said that inflation in Iraq has remained below 3% over the past three years, a rate he described as low compared to both the country’s past and neighboring economies. He credited the achievement to “a cautious monetary policy” by the Central Bank of Iraq, coordinated with fiscal and trade policies, which helped preserve the dinar’s purchasing power.

The comments came as the Ministry of Planning reported on Tuesday that inflation in August rose by 0.8% compared with July, which had recorded a 0.1% decline.

Unemployment has declined from 17% to 14% in a relatively short period, Saleh noted, “supported by government efforts” to boost agriculture, investment, and trade, alongside programs promoting domestic production and job creation.

On the exchange rate, he pointed out that the official price of 1,320 dinars per US dollar has held steady, calming markets, limiting the role of the parallel market, and reducing import costs, which in turn eased pressure on consumer prices.

Read more: Dollar dives in Iraq: Factions' gambit or economic progress?

Fiscal policy has also played a central role, according to Saleh. About 25% of the federal budget—equivalent to 13% of gross domestic product—was directed toward subsidizing agriculture, food and medicine, fuel, and electricity. Tax and customs exemptions further reduced the burden on citizens.

In the trade sector, he highlighted the creation of cooperative retail outlets for consumer and construction goods to break monopolies and provide alternatives, part of what he called a “price defense” mechanism to curb unjustified price increases.

Despite the positive indicators, Saleh warned of a challenge posed by the outflow of subsidized goods across borders, driven by price differences with neighboring markets, calling for tighter customs and trade oversight without harming legitimate cross-border commerce.

“This rare period of stability should be used as a foundation for sustainable growth by directing subsidies toward productive sectors rather than relying solely on consumption,” Saleh concluded.