Iran braces for deeper economic crisis as Trump threatens new sanctions

Iranian leaders are grappling with increased economic pressure following US President Donald Trump's threat of new sanctions, raising concerns of worsening hardship and potential unrest. The US administration announced plans to implement stringent economic measures against Iran, a day after Treasury Secretary Scott Besant announced "unprecedented" actions against Tehran next week, though details remain undisclosed.

Iranian officials, including political insiders and a former official, have revealed that internal pressure on the leadership is escalating, potentially leading to widespread unrest despite the regime's claims of resilience.

Iran had already been facing economic challenges, such as high inflation, a depreciating currency, energy shortages, and structural issues, before the conflict with the US and Israel. The ongoing war has exacerbated these problems, damaging infrastructure, disrupting trade, reducing production, and increasing the costs of reconstruction.

Ordinary Iranians are directly impacted, with construction projects halted, job opportunities dwindling, and rising material costs and weak recovery prospects further straining the economy. Civil engineer Arshia from Isfahan reported difficulties in finding work due to project delays, while Mohsen, a businessman in Bandar Abbas, had to close his import-export business and lay off ten employees due to disrupted operations.

Iran's cost-of-living crisis has worsened, with annual inflation reaching 66% in July, consumer prices up 87.9% year-on-year, and food inflation soaring to 128%. Official data shows the Iranian Statistical Center, the government body responsible for compiling such statistics, reported these alarming figures. Officials fear that the economic pressure could spark new popular protests, leading to the appointment of Hossein Taeb, a former protest crackdown figure, to lead the Basij forces, a paramilitary group under the Islamic Revolutionary Guard Corps.

Iran's authorities claim these measures are necessary to maintain stability during wartime, yet critics argue they risk widening the gap between the religious establishment and the public amid mounting economic pressure.

The struggle is palpable among Iranian families, who are cutting back on meat and basic foodstuffs, relying on cheaper alternatives. Government employee Hossein in Yazd reported that his salary runs out within days, and meat and chicken have disappeared from his family's table due to the rising cost of living. Housing costs have also surged, with rents rising 31% year-on-year in March, and state media reporting a 50% increase in Tehran's housing prices from the previous year.

Despite a 60% increase in the minimum wage this year, the declining value of the rial has eroded purchasing power, as the minimum wage in dollar terms has fallen from $105 to $86 since late March. Workers are adapting by switching careers or relocating, like Bijan, 40, who transitioned from engineering to online tutoring and moved his family to a cheaper province due to the rising cost of living.