The War on Iran’s Wallets

The war in Iran has had a profound impact on the country’s economy, pushing millions into poverty and squeezing household budgets. For Mina, a housewife in Iran, the war is no longer about air strikes or military statements; it’s about what’s on her family’s dinner table.

Economic crises can be the most insidious and pervasive forms of war, as Mina’s story illustrates. Inflation has soared to over 69%, with food prices rising by as much as 200% in some cases. The International Monetary Fund forecasts a contraction of 5.4% this year, while the World Bank warns of the devastating impact of conflict, weaker trade, and prolonged uncertainty.

Iran’s economic crisis predates the war, but the conflict has certainly intensified it. Inflation was already above 40%, the currency was weakening, budget deficits were chronic, and years of sanctions had taken their toll. The war acted as an external shock, accelerating the collapse in purchasing power through damage to infrastructure, disruption of trade, internet shutdowns, and rising inflation expectations.

The figures are stark: annual inflation has reached 66%, with year-over-year inflation nearing 88%. Food prices have risen even faster – bread and cereals by around 140%, meat and poultry by 135%, dairy products by over 116%, and edible oils by more than 200%. For many families, those numbers mean buying less meat, postponing medical treatment, and abandoning plans to save money.

The war has pushed some 4 million Iranians into poverty, with economists arguing that households often cut spending on travel and clothing first. As inflation persists, the cuts extend to food, healthcare, and education, placing growing pressure on middle-income families that once considered themselves financially secure.

Mina’s situation is not unique. “We don’t talk about the future anymore,” she says. “We only hope we can afford next month’s rent.” The private sector is also feeling the pinch, with regional trade routes changing rapidly since shipping through the Strait of Hormuz became more difficult.

Iranian traders are struggling to adapt to these changes. Mortaza, a trader, notes that China has moved to fill part of the gap left by suppliers in Dubai, but this shift has brought little benefit to Iranian traders. “With tensions continuing, I honestly don’t see a clear future for doing business in Iran,” he says.

Economist Ahmad Alavi argues that government measures may ease some immediate pressure but are unlikely to address the underlying problems. Without restoring confidence, reducing sanctions, and addressing structural problems, these policies remain short-term responses rather than lasting solutions.

The war on Iran’s wallets is a human crisis as much as an economic one. 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 – with more families cutting spending on protein, healthcare, and education.

As Mina’s story so poignantly illustrates, economic crises are often the most insidious and pervasive forms of war. The war in Iran is not just about military conflict; it’s also a war on its people’s wallets.