Iran's Currency Plunge Triggers Widespread Economic Crisis

The ongoing US military conflict in Iran has led to a severe economic crisis, with the country's currency experiencing a sharp decline. The Iranian rial has fallen against the US dollar, which is currently trading at around 230,000 tomans. This has pushed up import and raw-material costs, making it difficult for industries to operate profitably.

The inflation rate in Iran has reached an alarming 89%, with food prices increasing by 84% since the government's subsidy-credit program began. The widening gap between supply capacity and consumer purchasing power is a clear sign of stagflation across different parts of Iran's economy. Prices are rising while real demand weakens.

Households are increasingly relying on instalment purchases, with some effective interest rates reaching as high as 205%. Even everyday necessities like mobile phones have become unaffordable for many Iranians. The cost of preparing a primary-school student for the new academic year is estimated to be around 45% of a worker's monthly minimum wage.

The government is considering increasing its subsidy-credit allowance by 300,000 to 500,000 tomans, but this may not be enough to mitigate the impact of inflation. The state-aligned Khorasan newspaper reported that food inflation from the end of 2025 through the end of August was around 84%, while overall inflation over the same period stood at about 61%.