In Iran, the arithmetic of survival has replaced the arithmetic of aspiration. As war accelerates an already fragile economy — with inflation nearing 69 percent and food prices doubling or more — an estimated 3.5 to 4.5 million people have crossed into poverty since the conflict intensified, joining more than 40 million already below the line. What was once a middle-class life, measured in modest security and modest plans, is now measured in what a family can no longer afford to eat. History reminds us that economic suffering of this depth does not resolve quickly, and that uncertainty, once i
Iran's War Deepens Economic Crisis, Pushing Millions Into Poverty
Approximately 3.5-4.5 million Iranians have fallen into poverty since the conflict intensified, with over 40 million total now living below the poverty line.
We only hope we can afford next month's rent
Mark
Why does the war matter more to Mina than to economists?
Mimi
Because she lives the numbers. Inflation is abstract until you can't buy the food you need. For her, the war is not a headline—it's the empty space where meat used to be.
Mark
But Iran had economic problems before the war started. Why does Alavi say the war intensified rather than created the crisis?
Mimi
Because the foundation was already cracked. Sanctions, weak currency, high inflation—those were already there. The war was the shock that made everything collapse at once. It's the difference between a slow leak and a burst pipe.
Mark
If China is filling the trade gap, shouldn't that help Iranian merchants like Mortaza?
Mimi
It should, but it doesn't. The rial has collapsed so badly that even when goods arrive, Iranians can't afford them. And Mortaza has to replace his inventory at prices that keep climbing. The market isn't growing—it's shrinking.
Mark
What would actually fix this?
Mimi
Alavi says you need three things: confidence restored, sanctions lifted, and structural problems solved. But those are political questions, not economic ones. The government can't print confidence.
Mark
How long until things get better?
Mimi
Not soon. Even if the fighting stops tomorrow, the damage to trust and currency value doesn't repair itself. Households will keep cutting spending on essentials. Businesses will keep delaying investment. The uncertainty itself becomes the problem.
Mark
Is there any hope in the oil prices being higher?
Mimi
Not really. Higher global prices don't help Iran much because sanctions and transport costs eat up the gains. The money doesn't reach the people who need it.
El Pulso
- Iran's economy is contracting 5.4% while inflation approaches 69%, with food staples like edible oils and meat surging 135–200% — a pace that has outrun the wages and pensions of millions who once considered themselves stable.
- Between 3.5 and 4.5 million Iranians have fallen into poverty since the conflict intensified, pushing the total below the poverty line past 40 million and erasing the financial footing of salaried workers and retirees for the first time in their lives.
- Traders face near-daily exchange rate shifts that force inventory replacement at soaring costs while customers have less and less to spend, and the collapse of regional trade routes has brought new suppliers but no relief to Iranian merchants.
- The government's tools — subsidies, price controls, foreign exchange intervention — are widely seen as temporary measures that cannot repair structural damage without sanctions relief and a restoration of investor and consumer confidence.
- Uncertainty has itself become a compounding force: businesses are freezing investment, households are cutting essential spending in anticipation of worse to come, and economists warn that living standards will continue to deteriorate even if military tensions ease.
In Iran, the arithmetic of survival has replaced the arithmetic of aspiration. As war accelerates an already fragile economy — with inflation nearing 69 percent and food prices doubling or more — an estimated 3.5 to 4.5 million people have crossed into poverty since the conflict intensified, joining more than 40 million already below the line. What was once a middle-class life, measured in modest security and modest plans, is now measured in what a family can no longer afford to eat. History reminds us that economic suffering of this depth does not resolve quickly, and that uncertainty, once it takes root in the minds of households and businesses alike, becomes a crisis of its own.
Mina no longer buys red meat. Chicken has become a luxury. Since the war began, she has watched her family's table grow thinner, her savings disappear, and her sense of security dissolve into the daily calculation of rent and groceries. For her, the conflict is not measured in military terms — it is measured in what her family can no longer eat.
The IMF projects Iran's economy will contract 5.4 percent this year as inflation approaches 69 percent. But the aggregate figures obscure a more intimate catastrophe. Economist Ahmad Alavi, based in Sweden, explains that Iran did not enter the conflict in good health — inflation was already above 40 percent, the currency was weakening, and sanctions had been eroding growth for years. The war acted as an external shock that intensified everything at once. Food prices have climbed fastest: bread and cereals up roughly 140 percent, meat up 135 percent, dairy up 116 percent, edible oils over 200 percent.
Alavi estimates 3.5 to 4.5 million Iranians have fallen into poverty since the conflict intensified, bringing the total above 40 million. The pattern is consistent: families cut travel and clothing first, then food, healthcare, and education — the things that were supposed to be untouchable. Salaried workers and pensioners are falling below the poverty line for the first time because their incomes simply cannot keep pace.
The private sector faces its own squeeze. Mortaza, an Iranian trader, has watched regional routes shift as China fills gaps through Central Asian rail links, bypassing the risks of the Strait of Hormuz. Yet the rial's collapse and soaring inflation have prevented any market expansion. Exchange rates change almost daily, forcing traders to restock at higher costs while customers have less to spend. Uncertainty, Mortaza says, is now the primary obstacle — he sees no clear future for trading in Iran.
The government's options are narrow. Higher oil prices offer little relief while sanctions and transport costs constrain revenues. Subsidies and price controls may ease immediate pain but cannot address structural damage. Without restored confidence, sanctions relief, and exchange rate stability, Alavi expects living standards to keep falling — more families cutting protein, healthcare, and education, more businesses closing.
Mina has stopped making plans. She no longer thinks about what comes next. She only hopes she can afford next month's rent.
Mina no longer buys red meat. Chicken has become a luxury she can barely afford. Since the war began last year, she has watched her family's dinner table grow thinner, her savings evaporate, and her sense of financial security dissolve into the daily arithmetic of rent and groceries. For this housewife in Iran, the conflict is not measured in air strikes or military communiqués. It is measured in what her family can no longer eat.
Her experience is not isolated. The International Monetary Fund projects Iran's economy will contract by 5.4 percent this year while inflation approaches 69 percent. The World Bank has warned that the combination of conflict, weakened trade, and prolonged uncertainty is crushing the country's economic foundation. But these figures, stark as they are, obscure a more granular catastrophe: the systematic erosion of purchasing power across millions of households, particularly among families that once considered themselves secure.
Ahmad Alavi, an economist based in Sweden, distinguishes between cause and acceleration. Iran did not enter this conflict with a healthy economy. Inflation was already above 40 percent, the currency was weakening, budget deficits were chronic, and sanctions had been grinding away at growth for years. The war, he argues, acted as an external shock that intensified everything at once. Infrastructure damage, disruption of shipping through the Strait of Hormuz, internet shutdowns, and rising inflation expectations have collapsed purchasing power in ways that official statistics only partially capture. Annual inflation has reached 66 percent, with year-over-year inflation nearing 88 percent. Food prices have climbed even faster: bread and cereals up roughly 140 percent, meat and poultry up 135 percent, dairy products up more than 116 percent, and edible oils up over 200 percent.
These numbers translate into behavior. Families cut spending on travel and clothing first. As inflation persists, the cuts deepen into food, healthcare, and education—the essentials that were supposed to be untouchable. Alavi estimates that between 3.5 and 4.5 million Iranians have fallen into poverty since the conflict intensified, bringing the total number living below the poverty line to more than 40 million. Lower-income households have suffered most acutely, but the middle class is now facing the same pressures. Salaried workers and pensioners are falling below the poverty line for the first time in their lives because their incomes have simply failed to keep pace with inflation.
The private sector is experiencing its own squeeze. Mortaza, an Iranian trader, has watched regional trade routes shift rapidly. China has moved to fill gaps left by suppliers in Dubai, and because China can ship goods through rail links across Central Asia, it avoids many of the risks and delays of maritime transport through the Strait of Hormuz. Yet this shift has brought little benefit to Iranian merchants. The collapse of the rial and soaring inflation have prevented markets from expanding. Exchange rates change almost daily, forcing traders to replace inventory at much higher costs while customers have less purchasing power to buy anything at all. For Mortaza, uncertainty has become the primary obstacle to business. With tensions continuing, he sees no clear future for trading in Iran.
The government's options are limited. Despite higher global oil prices, Iran is unlikely to benefit significantly because sanctions, export restrictions, and higher transport costs continue to constrain oil revenues. Subsidies, price controls, and foreign exchange intervention may ease immediate pressure, but Alavi argues they cannot address the underlying structural problems. Without restoring confidence, reducing sanctions, and fixing the economy's fundamental weaknesses, these policies remain temporary band-aids on a deepening wound.
Uncertainty itself has become one of the biggest barriers to recovery. Businesses are delaying investment because they have little confidence in future conditions. Households are becoming cautious about spending, expecting prices to keep rising and their incomes to lose value further. Rebuilding confidence among investors, businesses, and consumers will take far longer than repairing physical infrastructure. Unless inflation eases, the exchange rate stabilizes, and trade conditions improve, many households will remain under financial pressure even if military tensions subside. Alavi expects living standards to deteriorate further if current trends continue. More families will cut spending on protein, healthcare, and education. Business closures and unemployment may rise.
Mina has stopped thinking about the future. She no longer makes plans or dreams about what comes next. She only hopes she can afford next month's rent.
Citas Notables
Since the war started last year, we have become poorer every day. I honestly can't remember the last time I bought red meat.— Mina, housewife in Iran
The war acted as an external shock. Damage to infrastructure, disruption of trade through the Strait of Hormuz, internet shutdowns and rising inflation expectations accelerated the collapse in purchasing power.— Ahmad Alavi, economist
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War & Conflict