Iran’s Economic Crisis Deepens Amidst Rising Prices and War Fears

Iranians are facing a surge in the cost of food and essential goods, compounded by geopolitical tensions and the lingering effects of recent protests. Many families are struggling to afford basic necessities as prices climb rapidly, with some sharing images on social media illustrating the shrinking contents of their shopping carts.

Economic Strain and Currency Devaluation

Iran’s economy has been grappling with significant challenges for years, stemming from international sanctions and internal mismanagement. Even as the 2015 nuclear deal provided temporary relief, the situation deteriorated after the U.S. Unilaterally withdrew from the accord in 2018. The reimposition and expansion of sanctions by the U.S., targeting Iran’s financial sector and energy exports, have accelerated the devaluation of the Iranian rial.

In 2015, the rial traded at approximately 32,000 to the dollar. By late December 2025, it had plummeted to 1.3 million rials per dollar, and on February 26, 2026, it reached a modern low of 1.65 million rials per dollar ¹, a decline attributed in part to fears of a potential U.S. Military strike.

Impact on Iranian Households

The economic pressure is disproportionately affecting lower-income families. Ebrahim Momeni, a 52-year-old retired civil servant, stated, “Everybody is under pressure: merchants, civil servants, laborers,” adding, “The weaker class of people is being crushed.” ²

Prices for essential goods are rising dramatically. Momeni reported that the price of one kilogram of red meat increased from 13 million rials (approximately $10) to 22 million rials (approximately $17) in the past month. A liter of milk jumped from 520,000 rials to 1.1 million rials, and a package of pasta increased from 340,000 rials to 570,000 rials during the same period. ⁴

Farhad Panahirad, a 44-year-old taxi driver, explained that he and his wife together earn approximately 600 million rials (about $460) per month. ²

Shoppers are adapting by checking daily price updates on social media and shopping late at night for discounted items. Some are similarly purchasing emergency supplies, such as flashlights, small gas ovens, and materials to reinforce windows, in anticipation of potential conflict. ²

Inflation and Unemployment

Inflation has surpassed 46% compared to January of the previous year ¹. Economists warn that the rial’s continued decline could create a vicious cycle of rising prices and reduced purchasing power, potentially causing long-term damage to an economy already burdened by high youth unemployment. The official unemployment rate was around 7.8% in October 2025, rising from 7.2% in the same period in 2024, and reaching as high as 20% among young people. Approximately 24 million Iranians are between the ages of 15 and 34. ⁴

Government Response

The government has acknowledged the hardship and began distributing monthly payments of 10 million rials in January to approximately 70 million people (roughly 75% of the population) to help cover food costs. Officials have indicated they may increase these payments if prices continue to rise.

Looking Ahead

The combination of economic pressure, geopolitical tensions, and the aftermath of recent protests has created a precarious situation for Iranians. Panahirad expressed pessimism about potential relief through negotiations, stating that the U.S. Is “bullying them, to some extent.” ² Momeni noted that the current state of uncertainty is “worse than war.” ²