Even before the outbreak of the current conflict, Iran was grappling with inflation running at nearly 50 per cent, and economic grievances had fuelled the largest anti-government protests in recent years. The war has now intensified these pressures, sending prices of everyday goods—from food and medicine to baby products and café meals—spiralling further upward.
Amir, a 40-year-old from Tehran’s suburbs, noted that the cost of his usual brand of toast had jumped from 700,000 rials to one million (about $0.75). A friend had to pay 180 million rials for a single cancer treatment tablet that cost only three million before the US and Israeli attacks began on 28 February. “And they have to buy a tablet every 20 days,” he said.
In central Tehran, the popular café Dobar raised all prices by 25 per cent in a single day, according to artist Kaveh. Even in Iran’s northwest, near the Turkish border, some imported products now cost three times their normal price, a 50-year-old woman told AFP.
The central bank’s decision in mid-March to issue a new ten-million rial banknote—followed by a five-million rial note the previous month—reflects the currency’s sharp devaluation since last June’s conflict with the US and Israel. Economic hardship and rial devaluations were key drivers of the January protests that began with strikes in Tehran’s bazaar and ended in a deadly government crackdown, with rights groups reporting thousands killed.
The war has also brought widespread job losses. Bazaars have cut opening hours, construction firms have laid off workers en masse—many of them Afghan migrants—and businesses across the country have closed. “When the war started, job opportunities became rare and people stopped construction,” said Faizullah Arab, a 23-year-old unemployed painter returning to Afghanistan. His compatriot Walijan Akbari, a 42-year-old labourer, added, “Employers have gone abroad and businesses have stopped.”
Internet and e-commerce operators have struggled under more than five weeks of a near-total communications blackout, with only Iran’s limited national network functioning. “I’m honestly really scared about our future, especially economically,” a 35-year-old finance worker in Isfahan told AFP. “Things are a disaster right now. Mass layoffs, widespread shutdowns… everything feels overwhelming.”
Airstrikes on Iran’s steel industry—critical for many downstream sectors—as well as petrochemical facilities, bridges, and roads are likely to have long-term repercussions for the national economy.
The banking sector, already vulnerable before the war with weak balance sheets, now faces further strain as consumers and businesses default on loans. Cash machine withdrawals were capped during the conflict, though card and online banking generally continued. The collapse of Ayandeh Bank at the end of last year, under the weight of $5.2 billion in bad loans, may be a harbinger of further instability. Adnan Mazarei, a former senior IMF official, warned that more bank rescues could be needed, forcing the central bank to print money and fuelling further inflation. Annual inflation stood at 47.5 per cent in February, according to Iran’s statistical agency.
