War Pushes Iran’s Economy to the Brink
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**Iran’s Economy Nears Collapse Under the Strains of War**
The daily lives of ordinary Iranians are becoming increasingly difficult as skyrocketing inflation and rapidly declining purchasing power shrink household budgets.
“As our options dwindle, we cut out fruit first, followed by dairy, and then anything else deemed non-essential,” a female resident of Tehran shared anonymously via an audio message to RFE/RL’s Radio Farda. “Eventually, you are only purchasing the absolute basics, yet even those have become unaffordable.”
Her struggles mirror those of millions across Iran who are enduring the severe economic consequences of the nation’s five-month conflict with the United States and Israel. While decades of international sanctions and domestic financial mismanagement had already weakened the economy, the current war has pushed the nation of 90 million to the brink of total collapse.
### Rising Unrest and Devastating Crackdowns
The economic crisis was already reaching a boiling point before the military strikes began. In late December—two months prior to the outbreak of war—surging inflation, a plummeting currency, and worsening living conditions sparked nationwide protests. Analysts described the demonstrations as the most significant challenge to the Islamic regime since the 1979 revolution.
Hundreds of thousands of citizens, spanning all 31 provinces, took to the streets to voice their anger against the leadership. Protesters directly targeted Supreme Leader Ayatollah Khamenei—who was subsequently killed on the first day of the war by U.S. and Israeli airstrikes—shouting “Death to Khamenei” as they protested their daily hardships.
The government responded with a violent crackdown. While human rights organizations have documented over 6,000 deaths, many activists believe the actual death toll is much higher, with some estimates reaching into the tens of thousands.
The war has only intensified these economic pressures. A sustained bombing campaign by the U.S. and Israel has devastated key infrastructure and industries, driving up unemployment and sending the cost of basic food, medicine, and utilities soaring.
### Skyrocketing Costs of Daily Survival
In Tehran, residents report that the prices of staple goods are rising almost daily. For instance, the price of a kilogram of potatoes recently jumped from 540,000 rials ($0.39) to 720,000 rials ($0.52) in a single week. During the same period, a tray of 30 eggs rose from 4,000,000 rials ($2.90) to 5,700,000 rials ($4.15), while the price of bread in the capital has doubled compared to last year.
“Fruit has become an unaffordable luxury,” another Tehran resident noted. “We simply run out of money long before the month ends.”
With Iran’s minimum monthly wage hovering around $100, local media reports indicate that an average family of four now spends roughly 70 percent of its income solely on food.
“Many people are quietly fading away,” said a 48-year-old mother. “I’ve stopped worrying about myself; my only concern is for my child, who seems to have no future at all.”
### Escalating Geopolitical and Economic Leverage
In addition to physical airstrikes, Washington has ramped up economic warfare by targeting Tehran’s primary revenue streams. The U.S. implemented a naval blockade on Iranian ports to halt oil exports, which serve as the country’s economic lifeline. While the blockade was briefly lifted under an interim peace agreement signed in June, it was quickly reinstated after the deal collapsed within weeks.
The U.S. Treasury has also introduced fresh sanctions to further block Iran’s access to foreign currency and global financial networks. U.S. President Donald Trump indicated that the administration is relying on this economic stranglehold to pressure Tehran into a favorable peace agreement.
“We’re only semi-negotiating with them,” Trump told Axios on August 9, suggesting a preference for economic containment over further military escalation. “We are just watching Iran with its huge inflation and the fact they have no money.”
However, experts question whether this approach will succeed. The Iranian government has consistently refused to yield on its core demands, demonstrating a willingness to endure immense military and economic costs to preserve its regime.
Furthermore, Iran has retaliated by disrupting global energy markets. By effectively shutting down the Strait of Hormuz—a vital transit route for global oil and gas—Tehran has triggered volatility in international markets. While the brief June peace agreement attempted to trade nuclear concessions for economic relief, disputes over who controls the strait quickly derailed the pact. Tehran maintains that its control over the waterway is its strongest point of leverage.
### “Iran’s Achilles’ Heel”
The impact of these combined pressures on Iran’s domestic economy is undeniable. Oil exports have halted, forcing the government to ration fuel, electricity, and foreign currency. The International Monetary Fund (IMF) projects that Iran’s inflation rate will hit nearly 69 percent this year, marking the highest level since 1979.
“The economy is Iran’s Achilles’ heel,” explained Masoumeh Taherkhani, a London-based economic analyst. “Even before the conflict, the country was sliding toward severe stagflation and potential hyperinflation.”
Taherkhani warned that the combination of war and the naval blockade has accelerated this decline. “Within a year, the economy could face a catastrophic collapse, marking a major turning point for the country,” she told Radio Farda, adding that ordinary citizens will continue to bear the brunt of the crisis through worsening shortages and slashed subsidies.
For those living through the crisis, the future remains entirely unpredictable.
“Planning ahead is impossible,” said a resident in Tehran. “Trying to save money is like holding water in a sieve—its value just slips away. People are simply trying to survive today, because no one knows how much worse tomorrow will be.”
