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Recent reports highlight a severe economic crisis in Iran, where millions of middle-class citizens have slipped below the poverty line due to accelerating inflation and deepening financial turmoil. Earlier this year, the Parliamentary Research Center revealed that the poverty line surged by 68% in 2023 compared to the previous year, making it increasingly difficult for families to afford even basic necessities and maintain a sufficient level of daily caloric intake.
On November 3, the U.S. dollar crossed the 70,000 toman mark in Tehran’s foreign exchange market, reaching 70,200 toman. This significant devaluation has further strained purchasing power and escalated prices for essential goods. Economic analysts have noted that “the government’s policy in the currency sector and budget planning will not allow stabilization or a decrease in the exchange rate,” underscoring the limited capacity for intervention in the current crisis. Minimum monthly living expenses for an average family have surged to 36 million tomans, while the average monthly income remains at only 10.89 million tomans.
Adding to the financial pressure, a significant hike in gasoline prices is anticipated for 2025. Mehrdad Lahouti, Vice President of the Budget and Planning Commission, highlighted the implications, stating, “This year, 90 trillion tomans were allocated for gasoline imports, but for next year, only 65 trillion tomans have been budgeted.” Lahouti explained the obvious outcome: “This clearly means that the government is likely planning to raise gasoline prices next year.” He also acknowledged that these decisions are made elsewhere and not solely within the purview of parliament, saying, “Decisions on these matters are made in other places, and 80% of the power in this regard has been transferred elsewhere.” The public remains largely unaware of how fuel prices will be determined, adding uncertainty and concern.
#Iran News:
Economy Plunges as Rial Hits Record Low and #StockMarket Suffers Sharp Declinehttps://t.co/7o6WlZsO10— NCRI-FAC (@iran_policy) October 20, 2024
The clerical regime in Iran has a fraught history with sudden increases in fuel prices, with the 2019 protests serving as a stark reminder. That November, an abrupt spike in gasoline prices sparked protests across at least 190 cities, which were met with a severe crackdown. The government shut down internet access nationwide to suppress the spread of information, and reports indicate that more than 1,500 people were killed during the unrest.
State-affiliated economist Mohsen Rannani has cast doubt on the ability of any economic solutions to effectively address the current crisis. “The Iranian economy has reached a point where no economic solution is effective anymore,” he asserted, comparing the economy to “an industrial town mired in political and financial instability.” Despite incentives, this environment discourages investment and hinders growth. Rannani emphasized that trust between the government and citizens is essential for recovery: “If the people do not trust the government, they will not follow any prescribed solutions.” He further pointed out that the current administration has failed to make significant strides toward economic recovery, saying, “The doctor has changed, but that does not mean the patient is healed.”
The ongoing crisis has led to significant shifts in consumer behavior, especially in food consumption. Reports indicate that high-quality protein sources like meat and dairy are being excluded from many families’ diets due to soaring prices. The annual per capita meat consumption in Iran is now estimated to be as low as 6 kilograms, starkly lower than the 67 kilograms in Kuwait and 62 kilograms in the UAE. In war-torn Iraq, meat consumption is more than two times higher than in Iran. The decline in dairy consumption is similarly concerning, with per capita intake below 70 kilograms annually, far less than the global standard of 150–160 kilograms. This marks a substantial decrease from 2010 when average consumption ranged between 100 and 130 kilograms.
Rannani further criticized the lack of a conducive environment for rational economic decision-making, saying, “There is no suitable foundation for rationality in our society; uncertainty destroys rational thinking.”
Watch and judge how #Iran's economy is run by the regime pic.twitter.com/k2QtOj9KqS
— NCRI-FAC (@iran_policy) December 17, 2023
This sentiment reflects the challenges in Iran, where the rulers prioritize their own interests, focusing on nuclear, missile, and regional agendas over implementing strategies that meaningfully address the economic crisis and improve the well-being of the people.
With inflation expected to continue its climb and budgetary constraints indicating further cuts in subsidies for essential goods, the future looks bleak for Iran’s middle class. Rising food prices, reduced quality of nutrition, and increasing poverty are not just economic issues but social ones with long-term consequences. Economists and analysts warn that unless significant policy changes and comprehensive reforms are enacted, Iran will face deeper poverty and more severe social challenges, exacerbating the already harsh living conditions for millions of its citizens.
With inflation climbing and subsidies for essential goods expected to be cut further, Iran’s middle class faces a bleak future. Rising food prices, poorer nutrition, and increasing poverty are creating severe social consequences. State-affiliated economists warn that without significant changes, deeper poverty and harsher living conditions will ignite social outrage, potentially leading to uprisings that the regime fears most.