Cost of living crisis grows in Iran: Inflation nears 70 percent
RastinewsIran's economic crisis is deepening. In August, annual inflation rose to 69.9 percent, while the increase in food prices reached 128 percent. The depreciation of the rial and the economic burden of the war are putting particular pressure on low-income groups. In Tehran, there is concern that economic hardship could once again spill into the streets.
Iran's long-running economic troubles have deepened further under the impact of the war and sanctions.
According to August data from Iran's Statistical Center, annual inflation rose to 69.9 percent. Prices increased by 89 percent compared to the same month last year, while monthly inflation was recorded at 3.4 percent.
The most severe picture emerged in basic necessities. Food, beverage and tobacco prices rose by around 128 percent over the year. Price increases for oils and fats exceeded 258 percent.
High inflation is hitting low-income groups the hardest. According to the data, annual inflation reaches as high as 78.3 percent among low-income groups.
Wage increase eroded by inflation
Iran's minimum wage was raised by around 60 percent at the start of the year. However, high inflation and the rial's depreciation against the dollar quickly eroded much of that increase.
The minimum wage's dollar equivalent, around 105 dollars at the end of March, fell to about 86 dollars as the rial lost value.
Recent reports in the Iranian press point to a similar picture. The number of families cutting back on meat and chicken consumption is rising. Fruit and dairy products are also becoming increasingly expensive for many families.
Foreign trade also contracts
Another dimension of the crisis is playing out in foreign trade.
President Masoud Pezeshkian said Iran's foreign trade had fallen by 35 percent due to sanctions and the US naval blockade.
The loss of oil revenue, production problems and the reconstruction of facilities damaged in the war are also adding to the government's fiscal pressure.
While trying to control the budget deficit, Iran's government must also continue state support for basic necessities.
Gasoline once again a critical issue
One of the most sensitive issues facing the Tehran government is gasoline prices.
Daily gasoline consumption in Iran exceeding production is forcing the government toward new regulations. However, the government is treading cautiously on the issue because of the public backlash a potential price increase could trigger.
This caution stems from what happened in the recent past.
In November 2019, a gasoline price hike in Iran triggered nationwide protests, which quickly turned into anti-government demonstrations.
Could the economic crisis spill into the streets again?
This is where the real concern in Tehran begins.
In their recent statements, Iranian officials have increasingly raised the possibility that the cost of living, unemployment and fuel prices could turn into public unrest.
Iran's police chief Ahmadreza Radan also listed the cost of living, the economy, unemployment and gasoline prices among the issues that could trigger social unrest.
The Iranian government's memory of this is fresh.
In December 2025, protests launched by bazaar merchants in Tehran over the rial's rapid depreciation and the cost of living quickly spread to other cities. The demonstrations, which began with economic demands, later turned into protests where political slogans were also chanted.
In the months since, economic indicators have not improved.
Inflation has approached the 70 percent mark. Food prices have more than doubled in a year. The rial continues to lose value. As foreign trade contracts, gasoline prices are once again under discussion.
As a result, Tehran is now closely watching not only inflation figures but also whether the cost of living crisis will once again spill into the streets.