The human cost of Iran’s crisis

Nearly 6 months into the confrontation with the United States (U.S.) and Israel, Iran is experiencing one of its most severe economic crises in years. While markets across the country remain stocked with food and basic goods, the ability of ordinary Iranians to afford those essentials has deteriorated sharply as inflation accelerates, the national currency loses value, unemployment rises, and purchasing power continues to erode.

The country’s economic difficulties, already rooted in years of international sanctions and structural weaknesses, have intensified following months of conflict, disruptions to trade, and a U.S.-led campaign, dubbed “Operation Economic Outcast,” to further restrict Iran’s financial and energy sectors. The result has been a growing cost-of-living crisis that is increasingly shaping the daily lives of millions of Iranian families.

Families struggle to afford basic necessities

Across Iran, the crisis is being felt most acutely by ordinary households.

Although supermarket shelves remain supplied, rising prices have forced many families to significantly reduce their consumption. Many have eliminated meat, fruit, and other higher-cost foods from their diets while cutting spending on leisure, education, and non-essential purchases.

In Tehran’s Grand Bazaar, a historic economic and political hub, central to Iran’s commerce, social networks, and revolutionary movements, shoppers increasingly seek lower-priced alternatives as food prices continue climbing. Since the outbreak of the conflict, rice prices have reportedly risen by around 60%, while beef prices have increased by approximately 150%.

Many working Iranians are also taking additional jobs or extending their working hours simply to meet everyday expenses. Taxi drivers, shopkeepers, teachers, and public-sector employees alike report that incomes are no longer keeping pace with inflation, despite working considerably longer hours than before.

The financial burden extends beyond food. Parents increasingly report being unable to afford extracurricular activities for their children or replace household necessities, reflecting a broader decline in purchasing power rather than shortages of goods.

Iranian President Masoud Pezeshkian has publicly acknowledged the scale of the challenge, admitting that the country is facing “many difficulties.” He identified inflation, unemployment, and declining living standards as among the government’s most pressing concerns.

The International Monetary Fund (IMF) expects Iranian inflation to approach 70% by the end of the year, while projecting that the country’s economy will contract by more than 5%, further worsening living conditions.

Currency depreciation fuels inflation

The latest economic pressures have accelerated the depreciation of Iran’s currency, further increasing the cost of imported goods and consumer products.

The U.S. dollar has surpassed 200,000 tomans in open-market trading, while the price of gold has climbed sharply as Iranians seek to protect their savings against inflation.

The currency’s decline has rapidly translated into higher prices for electronics, mobile phones, automobile spare parts, and other imported products. Many retailers report significantly fewer customers as consumers postpone major purchases amid growing economic uncertainty.

At the same time, Tehran’s stock market has retreated after previous gains, reflecting investor concerns over the expanding sanctions regime and the uncertain economic outlook.

Petrol concerns add to public anxiety

Fuel has emerged as another sensitive issue.

Following Washington’s announcement of a new sanctions package, long queues formed outside petrol stations in Tehran as motorists rushed to fill their vehicles amid fears of future shortages or restrictions.

Although the government has maintained the heavily subsidized monthly allocation of 60 litres priced at 1,500 tomans per litre, it recently reduced additional subsidized fuel quotas. The monthly allocation of 70 litres priced at 3,000 tomans has been cut to 50 litres, while the 30-litre allocation priced at 5,000 tomans has been reduced to 15 litres. Authorities have stressed that fuel prices themselves will not increase and denied reports about introducing a fourth pricing tier.

The reductions come as officials acknowledge that domestic gasoline consumption now exceeds production, creating an estimated daily deficit of around 15 million litres.

The issue remains politically sensitive because previous fuel price increases have triggered widespread nationwide protests. Although the government has avoided raising prices, tightening fuel allocations has revived public concerns over rising transportation costs and broader inflationary pressures.

Businesses and employment under pressure

The deteriorating economic environment is also affecting employment and private businesses.

Official figures place unemployment at around 9.1%, although several Iranian analysts and state-affiliated media outlets suggest the actual rate is substantially higher. According to Labour Ministry officials, more than 1 million jobs had reportedly been lost within the first 3 months of the conflict.

Businesses dependent on imported goods continue to face supply-chain disruptions linked to restrictions on shipping and trade, while automobile dealers, electronics retailers, and spare-parts suppliers report declining sales as consumer confidence weakens.

Although authorities have expanded assistance programs for lower-income households, delays in distributing electronic subsidies for essential goods have generated additional public frustration.

New U.S. sanctions deepen uncertainty

The economic pressures have intensified following Washington’s announcement of a sweeping new sanctions package designed to further isolate Iran economically.

U.S. Treasury Secretary Scott Bessent described the measures as an effort to achieve the country’s “economic asphyxiation,” stating that the U.S. aims to cut off every significant financial lifeline supporting the Iranian government.

The expanded secondary sanctions target sectors including technology, gold, aviation, shipping, digital assets, and oil-related activities. They also impose restrictions on approximately 60 individuals, companies, and vessels allegedly involved in Iran’s oil exports, weapons procurement, and cyber operations.

The measures extend beyond Iran itself, warning foreign governments, banks, and companies that continued business with Tehran could expose them to U.S. penalties. The announcement has further unsettled financial markets and strengthened expectations of continued economic instability inside Iran.

Government seeks reassurance amid mounting concerns

Iranian officials have sought to reassure the public that preparations were already in place before the latest U.S. measures.

Economy Minister Ali Madanizadeh stated that the government had developed a two-year plan to manage the sanctions and dismissed Washington’s strategy as destined for “another defeat.” Other officials have argued that decades of sanctions have enabled Iran to build mechanisms for adapting through domestic production, alternative financial networks, informal trade routes, and the continued use of shadow shipping fleets for oil exports.

Nevertheless, while the country has considerable experience circumventing external sanctions, long-standing domestic challenges (including inflation, banking-sector imbalances, corruption, and structural economic weaknesses) remain significant obstacles.

Public concern grows as uncertainty persists

Iran has experienced repeated waves of economic protests in recent years, driven by inflation, declining purchasing power, and rising unemployment. Earlier this year, demonstrations over living conditions spread across several parts of the country before being suppressed by security forces.

Today, many Iranians remain primarily concerned with the economic impact of the current crisis rather than military developments. Residents increasingly describe a daily struggle to preserve their standard of living amid rising prices, shrinking incomes, and growing uncertainty over future economic conditions.

While Iranian leaders continue to insist that the country can withstand additional economic pressure, the prolonged conflict, expanding sanctions, weakening currency, and persistent inflation are placing ever greater strain on households, businesses, and the broader economy. With negotiations still stalled and no immediate relief in sight, the country’s internal economic challenges are expected to remain one of Iran's most pressing concerns in the months ahead.