Iran's economy is being tested by war, blockades and soaring inflation

Iran’s economy is collapsing under the weight of war, US-led blockades, and record inflation, with the International Monetary Fund forecasting a 6% contraction next year. Annual inflation hit 53.7% in mid-April, while food prices surged over 115% compared to last year, according to official data. The Iranian rial has plummeted to a record low of 1.9 million per dollar, exacerbating economic pain and fueling nationwide protests. Taxi drivers in Tehran, like 56-year-old Hossein Farmani, report steep price hikes since the war began, with staples such as tea, milk, chicken, and eggs rising by 45%, 31%, and 60% respectively. Mohammad Deljoo, a 73-year-old driver earning just $4 daily, blames price gouging for forcing families to cut back to essentials like bread and potatoes. Meanwhile, ride-hailing workers like Ali Asghar Nahardani, 32, struggle to survive after unpaid wages pushed them into informal street vending. The US naval blockade of the Strait of Hormuz has crippled Iran’s key industries, leading to mass job losses and business closures. Government measures, including a 60% minimum wage hike and coupon programs, have failed to curb inflation, according to Taymur Rahmani, an economist at the University of Tehran. Free public transport in Tehran offers little relief, as taxi drivers face shrinking incomes amid soaring costs for car parts and fuel. Hadi Kahalzadeh, an Iranian economist at Brandeis University, warns that while Iran has historically endured sanctions, the current crisis risks severe economic collapse or shortages of essential goods. The burden falls heavily on ordinary citizens, who face higher inflation, deeper poverty, and deteriorating public services. Despite resilience, the war’s economic toll threatens to destabilize daily life for millions.