A low and stable inflation rate improves well-being of population. This is manifested in various ways: A low inflation rate promotes the efficient use of productive resources, reduces uncertainty and fosters investment. This also, prevents arbitrary redistribution of income and wealth, which particularly affect the poorest sectors of society, with the result that wage earners and retired people have fewer mechanisms to protect themselves against the inflationary erosion of their income. For this reasons, price stability is commonly regarded as the single most important macro-economic objective.
Inflation must be controlled by the Central Bank by Monetary policy, but dominance of Fiscal Policy is a powerful obstacle for this.
Iran as an oil producing economy has been suffering from high inflation for many years. This natural resource is one of the main factors which increase instability of inflation. What is the most effective way to lower and stabilize inflation in Iran?