Iran's inflation rate rose slightly in January to 7.8 per cent year-on-year, from 7.4 per cent the previous month, it was reported.

The official yearly rate in the world's fifth-largest oil exporter stood at a peak of nearly 30 per cent last year.

Iran's top legislative body last month approved a plan proposed by President Mahmoud Ahmadinejad's government to phase out energy and food subsidies.

Removing subsidies could make Iran less vulnerable to any possible Western sanctions but critics of the plan fear it would stoke inflation.

The year-on-year inflation rate in the month of Day (ended on January 20) rose slightly even though consumer prices remained unchanged from the previous month.

Critics have accused Ahmadinejad of stoking inflation with profligate spending of petrodollars since 2005, when he first came to office, pledging to share out Iran's oil wealth more fairly.-Reuters