Iran inflation 10.4 pct yr on yr in March - report

TEHRAN, April 5 (Reuters) - Iran’s inflation continued its recent upward trend in March, reaching 10.4 percent year-on-year, the official IRNA news agency said on Monday quoting a central bank report.

The official annual rate in the world’s fifth-largest oil exporter has fallen from a peak of nearly 30 percent late last year, but over the past three months there has been an upward trend.

The inflation rate in the month of Esfand (ended on March 20) reached 10.8 percent in comparison to the previous month, the Central Bank said.

Easing inflationary pressures could help President Mahmoud Ahmadinejad, re-elected for a second four-year term in June in a disputed vote, to counter criticisms over enforcing a subsidy reform plan that might stoke price rises and hurt the poor.

Last month parliament passed a state budget for the Iranian year, which started on March 21, that did not contain the radical reductions in subsidies sought by Ahmadinejad. Under the plan, food and energy subsidies would be phased out over five years.

Ahmadinejad sent a letter to parliament calling for a “review of the subsidy law” to reconsider their rejection of government proposals to slash costly subsidies by $40 billion.

Removing subsidies could make Iran less vulnerable to any possible Western sanctions over its disputed nuclear programme, which the West fears is a cover to build bombs. Iran says its nuclear work is aimed at generating power to meet its booming demand.

The average rate over the last 12 months, compared with the previous year, fell to 11.3 percent from 13.5, IRNA said, quoting the central bank report.

Critics accuse Ahmadinejad of stoking inflation with reckless spending of petrodollars since 2005, when he first came to office, pledging to share out Iran’s oil wealth more fairly.

The government blames inflation on international energy and food price rises that peaked during 2008 and points to a falling trend since late last year.

Economists say the inflation decline is due to various reasons such as a slowing economy as a result of lower crude prices over the last year and the global economic downturn, and also monetary tightening by the central bank. (Writing by Ramin Mostafavi; Editing by Jerry Norton)