Press TV - Iran's Parliament has approved a proposal to gradually cut subsidies for food and transportation services, amid fears that the bill might hike up prices.

According to Article Four of the bill, subsidies on food items such as wheat, rice, oil, milk and sugar as well as subsidies on postal and transportation services will be gradually cut in five years.

Lawmakers, however, excluded medicine subsidies from the article before approving it.

On the Parliament's evening session, lawmakers also passed Article Five of the bill which eliminates subsidies for flour and bread.

On Sunday, the Parliament passed two other articles of the bill that would gradually cut energy subsidies in a bid to reduce dependence on fuel imports by lowering demand.

The bill needs the approval of the Guardian Council before it can be implemented.

Under the bill, a portion of the revenue recovered from cutting subsidies will be paid to low-income families.

The government says the plan would reform Iran's economy, but critics believe it will increase inflation.

According to the Central Bank of Iran (CBI) figures, the annual inflation rate in the Iranian month of Shahrivar, which ended on September 22, dropped to 9.3 percent, from 13.1 percent in August.

If measured as the average rate in the 12 months to Shahrivar, the inflation rate dropped to 18.5 percent, compared with the year ending on August 22, in which the rate stood at 20.2 percent.

The official year-on-year inflation rate reached a peak of 30 percent last year.

... Payvand News - 10/20/09 ... --