Iran’s struggling economy faces complete breakdown as weeks of ongoing conflict drive food costs skyward, with some essential items climbing 50% beyond pre-war prices and others doubling entirely.
The economic devastation extends far beyond rising grocery bills. Internet disruptions have crippled online services, manufacturing plants cannot secure necessary raw materials, and government operations have been severely hampered. One resident of Tehran expressed their desperation to The Media Line, stating: “It has become impossible to endure this situation any longer.”
Statistics from government-linked organizations and economic experts reveal that over 40% of Iran’s population currently exists below the absolute poverty threshold, with the capital city seeing rates exceed 50%. Economic analysts caution that actual poverty levels may have surged past 60% across the entire nation.
The disappearing middle class has created a stark divide between those making under 50 million tomans monthly (approximately $320) and higher earners bringing in over 200 million tomans per month (roughly $1,280).
Most workers and skilled laborers in Tehran earn no more than 25 million tomans monthly (about $160), placing them well below what economists consider necessary for basic living standards – at least double that amount.
The timing compounds these difficulties, as the Persian New Year traditionally brings increased household spending on food, clothing, and celebrations. This year’s seasonal price increases have been dramatically amplified by wartime conditions.
In the previous year, 180 Iranian economists published a warning about impending economic collapse caused by uncontrolled inflation and currency policies that provided special advantages to government-connected organizations, including the Islamic Revolutionary Guard Corps (IRGC).
Official attempts to stabilize currency exchange rates have proven unsuccessful. The US dollar’s value nearly doubled within seven months, causing Iran’s national currency to plummet.
Last summer’s initial war impact destabilized Iran’s oil-reliant economy, leading to mounting tensions that exploded into countrywide protests in January. These demonstrations quickly became political in nature, with millions participating in cities and rural communities alike in unprecedented shows of dissent that authorities eventually crushed through violent suppression.
Currently, despite Central Bank efforts to strengthen the currency, the introduction of one-million-toman banknotes signals further economic deterioration in a system largely dominated by the IRGC and other leadership-connected institutions.
The International Monetary Fund has identified Iran among nations experiencing severe economic decline in 2025, estimating that real household income values have dropped 31% from the previous year amid extremely high inflation.
Economic journalist Arezoo Karimi explained to The Media Line: “One month before the war began, official statistics showed inflation in Iran had reached its highest level since World War II.” She noted that internet shutdowns have directly harmed online businesses while indirectly impacting the broader economy.
Karimi warned that continuing these conditions will further destabilize the war-torn economy and increase unemployment. She characterized Iran’s economy as a fragile combination of high inflation, stagnant financial markets and economic activity, and increasing instability – all worsened by warfare.
She observed that escalating food costs have forced lower and middle-income families to eliminate certain foods from their meals, with the economic crisis hitting these groups hardest.
Even if Iran’s government and the United States reached an agreement, Karimi suggested the immediate economic benefits would likely be minimal, as underlying issues like poor growth, excessive liquidity, and ongoing inflation would persist without sanctions relief and new fiscal policies.
Before January’s protests, Iranian website Rouydad 24 reported food inflation exceeding 66% and presented a grim forecast. The site wrote: “What we see today in economic charts and data is the erosion of the middle class, widespread despair, depression, rising suicide rates, and the collapse of a nation’s hopes,” adding that most economists believe “this is only the beginning, and a harsh winter lies ahead for Iran.”
This prediction came true weeks later when the national currency’s collapse against the US dollar effectively destroyed private businesses competing in a market controlled by state-connected entities, including IRGC-linked networks. Small protests grew into nationwide demonstrations. The situation has continued, with the war’s start effectively extending that “harsh winter” into economic chaos this spring.
Mahtab, a senior office employee in central Tehran, shared with The Media Line: “Prices are rising every day, and some food items have increased by 70 to 80% since the war began.” Earning approximately 40 million tomans monthly, she struggles to afford basic food and household necessities. Traditional Nowruz holiday gatherings with extended family were reduced to immediate relatives only due to soaring expenses. Living in constant fear of missile, bomb, or drone attacks on her home, she believes the deteriorating economic situation has pushed citizens to their limit and could spark new protests.
Government officials have promised worker wage increases up to 60%. While authorities claim oil production and exports continue, further war escalation could worsen budget deficits during wartime when the government already faces pressure to expand subsidies to prevent renewed unrest that could seriously threaten its survival in coming weeks.
Describing wartime price increases before Nowruz, Mahtab noted food costs rising 70% to 80% compared to pre-conflict levels. “Some items like cooking oil have actually doubled in price,” she explained, adding: “Every time we go to the store, we’re shocked.” Many families initially relied on stored supplies like pasta and canned tuna, but these reserves are now exhausted and unsustainable for daily needs.
“Yesterday, I bought three loaves of bread, a few oranges, a tray of eggs, and one bottle of milk—it cost 700,000 tomans ($4.6). If I want to buy meat, chicken, rice, and oil tomorrow, I’d have to spend half my monthly salary,” Mahtab explained as air defense sounds could be heard nearby.
She mentioned that Persian New Year visits were reduced due to war and warned that prices might not decrease even after fighting ends. “Even if the war ends tomorrow, there’s no guarantee prices will go back down.” Government efforts to inject dollars to maintain exchange rates below 150,000 tomans have not reduced food costs.
Daily existence has been severely disrupted with internet outages, mostly inactive markets and industries, and widespread fear. “Every night we lie awake in fear, wondering when it will be our turn to be hit by a missile. People have reached their breaking point.”
