"Increase in price of oil, while resulting in rising national revenues, ends up in an increase in price of imported goods on the average. Based on economic estimates, each 10 percent increase in price of imported goods adds up 5.5 percent to inflation," said President Ahmadinejad in a live televised debate prior to his tour of Hajj pilgrimage.



Elaborating on imports, President Ahmadinejad said imports in the first eight months of the year decreased by 3.5 percent in weight but rose by 12.5 percent in value. Some of the goods such as wheat, rice, corn and oil were among essential goods and had something to do with public living, he added.



Furthermore, transportation expenditures too rose three- to four-fold in the period to the extent that the cost rose to 120 dollars from 45 dollars per ton, which had unavoidable impact on inflation.



As for depreciation of the dollar against other foreign currencies, Ahmadinejad said, "Since the country's economy is pegged on the dollar, we tried to control the rate of the currency and keep it fixed, which prompted double inflation."

He said rise in insurance cost too had some sort of psychological impact on the market.



As for internal reasons of inflation, Ahmadinejad referred to sharp increase in liquidity rate due to government expenditures and money generation by the monetary, financial and credit institutions.



He cited problems with the country's economic structure, low productivity in the production system, high cost price,

inflexibility of production sector, oil-oriented income, high consumption of government or public institutions and growing negative trade balance of the country among other internal factors of inflation. The government has some plans to harness the inflation and control these factors, he added.



On main causes of inflation, the president said, "That's not related to yesterday or today. They (the main factors) have had impact on level of inflation since the past but they started an upward trend since recent months and the government tried to control them." On productivity, he said his government had launched wide scale plans in light of which productivity rose to 0.84 percent from 0.48 percent last year. "The figure should further increase and reach the level of 2.5 percent," he added.



He said that the recent summit of the Persian Gulf Cooperation Council would have impact on regional peace and security.

President Ahmadinejad said his first ever presence in the summit bore the message that a "new era in relations between Iran and the PGCC states had begun."

He said the meeting had been held in a sincere atmosphere.



President last week welcomed the idea of a joint organization between Iran and PGCC member states.



He made the remarks in answer to a question at the end of his press conference about possibility of Tehran's membership at the PGCC.



While in Doha, Qatar, for the latest PGCC summit, the president submitted some proposals for promotion of ties between PGCC members and Iran which were welcomed by the council member states.



The summit was held in the Qatari capital on December 3-4.



President Ahmadinejad attended the summit at the invitation of the Emir of Qatar Sheikh Hamad bin Khalifa al-Thani.



This was the first time that an Iranian president was invited to attend a PGCC summit.



In his address to the summit, President Ahmadinejad made a string of proposals for economic and security cooperation.



He said the six oil-rich Persian Gulf Arab states, namely Saudi Arabia, Qatar, Oman, and the UAE, Kuwait, Bahrain as well as Iran should work together to establish 'regional security and economic pacts' without foreign influence.

Tehran, Dec 16, IRNA