Iran's economy has struggled for years because of international sanctions and mismanagement.
It experienced some relief under a 2015 nuclear deal that lifted many sanctions, until U.S. President Donald Trump unilaterally withdrew from the accord in 2018. Since coming back into office more than a year ago, Trump revived a “maximum pressure” campaign, expanding sanctions that target Iran’s financial sector and energy exports. On Wednesday, his administration imposed new sanctions on 30 people and companies accused of enabling Iran’s production of ballistic missiles and drones, and illicit oil sales.
The pressure has accelerated the devaluation of Iran's currency, the rial. In 2015, when the nuclear deal was signed, the rial traded at about 32,000 to the dollar. In late December, it was at 1.3 million to the dollar. On Wednesday, it had reached a new low at 1.65 million rials to the dollar — worsened by fears of a U.S. attack.
Lower classes desperate for relief as prices jump
Inflation has surpassed 46% compared with January of last year. Economists warn that the rial’s accelerating decline risks feeding a vicious cycle of higher prices and reduced purchasing power. They expect double-digit inflation to plague Iran’s economy — which also suffers from high unemployment among younger people — for years to come.
The plunging value of the rial was one trigger for protests that began in late December in Tehran’s main bazaar and then spiraled nationwide.
Prices for everyday items, from groceries to toiletries, are soaring.
Momeni said he makes about 700 million rials (about $540) a month. Just in the past month, a kilo (2.2 pounds) of red meat increased from 13 million rials ($10) to 22 million rials ($17). In the same period, the price of a liter of milk (a quarter of a gallon) doubled from 520,000 rials to 1.1 million rials, and a box of pasta rose from 340,000 rials to 570,000 rials.
“Those with lower incomes and fixed salaries are suffering because of the price hikes,” said Farhad Panahirad, a 44-year-old taxi driver. Together, he and his wife make about 600 million rials (about $460) a month, he said.
Several people in the markets on Wednesday explained how they try to deal with rising financial pressures — they check social media every day to see news about the latest prices, or go shopping at night, when some produce is marked down to half price to get rid of inventory before it spoils.
Fearing the U.S. could launch strikes at any time, Iranians are also scrambling to purchase emergency supplies. That includes flashlights, small gas ovens, and tape for securing windows against explosions, said the owner of a tool shop in central Iran, who spoke on condition of anonymity for fear of retaliation.
Some try to purchase bulk amounts of beans, bread, rice and canned food despite the high prices. “I am not happy to buy this much stuff, but my wife said we had to be prepared for uncertainty in the coming days,” said Saeed Ebrahimi, 43, an electrical technician and father of two.
Even items such as washing machines, vacuum cleaners, and refrigerators have doubled in price, according to Iranian media.
War fears hang over the economy
Tehran-based economist Farbod Molavi wrote in the independent Dona-e-Eghtesad newspaper that prices are higher because of uncertainty in the market and the rising costs of raw materials. Iran is suffering from both a recession and high unemployment, he added.
Unemployment was officially around 7.8% in October, up from 7.2% for the same period in 2024, and runs as high as 20% among young people. About 24 million Iranians are between 15 and 34 years old, according to official statistics.
Acknowledging the suffering, the government in January began distributing payments of 10 million rials a month each to some 70 million people, about 75% of the population, to spend on food. It has promised to increase the payments if prices go higher.
But the strain appears likely to continue. Trump has threatened strikes on Iran if it doesn't agree to a new accord curtailing its nuclear program. He has massed the largest buildup of warships and aircraft in the region in decades. The two sides have held two rounds of negotiations in recent weeks and a third is expected to be held in Geneva on Thursday.
Panahirad, the taxi driver, said he is pessimistic the negotiations will bring any relief for those struggling to buy food. “(Trump) is bullying them, to some extent. After all, he is a superpower and says what he wishes must be done,” he said,
“Wherever you go now people are talking about war. If you go to a bakery to buy bread you see people talking about war,” said Momeni. "This state of limbo is worse than war.”