The rial is collapsing, food is getting more expensive and fuel is running out: The economic crisis shaking Iran

The economic crisis in Iran is deepening, and six months of war, naval blockade, and American sanctions are pushing growing segments of the population into a daily struggle for food, fuel, and medicine. Official data published in recent days paint an unusual picture: annual inflation in August reached 84.4%, the currency exchange rate collapsed to a historic low, and prices of basic food products have jumped by hundreds of percent within a year.

According to data published in Iran, an average household was required in August to pay 84.4% more than in the same month last year for an identical basket of products and services. The average inflation rate in the last 12 months rose to 65.1%, while within one month vegetables and legumes became 8.7% more expensive, dairy products and eggs by 7.8%, and rent by 6%. In July, food inflation was already at more than 128% compared to last year.

Increases in certain products are even sharper. The price of vegetable oil in August was 383% higher than in the same period last year. The price of eggs jumped by 294%, chicken became 177% more expensive, and red meat by 148%. At the same time, unemployment rose at the beginning of the summer to a four-year high — 9.1% — and many Iranians are forced to work more than one job to survive.

The significance is clearly felt in daily life. Families are reducing the number of products they buy, changing the composition of meals, repairing old clothes instead of replacing them, and delaying medical treatments. Many medicines are in short supply, but can be obtained on the black market at high prices.

According to the Iranian news agency Mehr, the demand for red meat in April fell by about 50% compared to the same period last year. At the same time, a sharp increase was recorded in the consumption of potatoes, which became a cheaper substitute — until a shortage arose in them as well.

"Basic products like eggs are no longer within reach of middle-class and working-class families," said Iranian activist Golshan Fathi. "They don't understand that people can no longer afford even a normal life."

Mohsen Zovar, a biomedical engineer, described the change in citizens' priorities: "For part of the population, the issue is no longer buying a house or a car. The issue is giving up meat, reducing the quality of food, delaying medical treatment, and trying to scrape by until the end of the month."

The collapse of the currency is also accelerating the damage to purchasing power. On August 23, the dollar on the free market reached about two million rials — a new negative record. According to reports from Iran, the monthly minimum wage is now worth only about 87 dollars at the market rate, while common salaries range between 105 and 157 dollars. The devaluation of the rial makes food, raw materials, medical equipment, and any product the country is required to import even more expensive.

To the food crisis, a fuel shortage has also been added in recent days. Long lines have formed in Tehran and Mashhad, sometimes along entire streets, after many stations — including some of the largest in the cities — were closed. The authorities claimed that these were panic purchases caused by rumors of a planned increase in fuel prices, and also as a result of the Israeli strike on two of Tehran's three central fuel reservoirs.

Within the government, discussions have been held for weeks about raising the price, in an attempt to reduce the cost of subsidies and fuel consumption. But senior regime officials remember well the events of November 2019, when a sudden 50% increase in the price of gasoline ignited violent protests across the country.

Public anger increased following an unusual admission by Scab Asfahani, the deputy president of Iran, that elements from both political camps in the country are involved in fuel smuggling. "If I close their operations, they will break my windows," he said. President Masoud Pezeshkian was called to investigate his words.

But instead of expanding transparency, the government is actually preparing to reduce it. Government spokeswoman Fatemeh Mohajerani announced that poverty data will henceforth be published only with the approval of the Supreme National Security Council. In doing so, the decline in the standard of living effectively becomes classified security data.

Senior regime officials are trying to present the crisis as part of the national campaign against the United States. Hojjat al-Islam Taeb, the new commander of the Basij force and a close associate of Supreme Leader Mojtaba Khamenei, called for reducing fuel consumption by up to 10% to reduce the need for expensive imports. His words implied that avoiding non-essential travel is a patriotic act.

Mohsen Rezaei, the new secretary of the Supreme National Security Council, even suggested that young people "start producing in their homes the products they and society need." The editor of the Iranian economic journal "Tejarat Farda," Mohammad Taheri, compared the recommendation to Mao Zedong's "backyard steel furnaces" — an attempt that failed and ended in economic and social disaster.

President Pezeshkian himself is already publicly admitting the depth of the damage. In an interview with state television, he said that Iran's imports and exports have fallen in recent months by 25% to 35%, with the damage to imports being even more severe. "And then there are people who say that sanctions have no effect," he said. "I really don't know what to say to these people."

According to the president, the blockade of the ports and the sanctions have harmed foreign trade, although in the short period when the memorandum of understanding with Washington was in effect in June, Iran managed to sell about 90 million barrels of oil. The agreement collapsed after a short time, partly due to the dispute over the Strait of Hormuz.

Energy expert Amir-Hossein Hashemi-Javid warned that the root of the crisis is Iran's inability to sell its oil. "The channels for selling Iranian oil are drying up," he said. "Oil that cannot reach from the well to the customers does not provide income to the economy. It simply becomes barrels whose production, storage, and risk costs increase every day."

Now Washington is seeking to tighten the pressure even further. The Trump administration has launched a new sanctions campaign called "Operation Economic Pariah," under which the US Treasury Department plans to impose additional sanctions every week on banks, companies, and individuals involved in transferring funds and selling oil for Iran. Treasury Secretary Scott Bessent said that another bank is expected to be included in the list soon, and that the United States does not rule out measures against entities in China — the main purchaser of Iranian oil.

Iranian officials have called the sanctions campaign "state terrorism" and a "crime against humanity," arguing that it harms citizens first and foremost. However, within the leadership, the fear is growing that it is not the economic distress itself that will be the main threat to the regime, but the possibility that it will lead to widespread protest again.

According to sources who spoke to Reuters, senior government officials fear that further increases in food or fuel prices could reignite social unrest.