Iran economic crisis deepens: Food prices soar, Rial at record low as US launches new sanctions

Iran is grappling with an escalating economic crisis, marked by soaring food prices, a plummeting currency, fuel shortages, and falling purchasing power, placing significant strain on households. The US has intensified its sanctions campaign, labeled "Operation Economic Outcast," as many Iranians already suffer from an economy in severe distress.

The Guardian notes that the economic crisis has become a parallel battlefield for Iran's leadership, which is gravely concerned that deteriorating living standards might trigger broader social unrest.

Basic goods have seen a sharp cost increase. In August, vegetable oil prices surged 383% compared to the previous year, while egg prices jumped 294%, chicken 177%, and red meat 148%. This has forced families to cut back on food and adjust their diets. Demand for red meat plummeted by 50% in April 2026 compared to the same month a year earlier. Many households now prioritize food and medical care over major purchases.

Iran's currency, the rial, has also hit a record low. On August 23, the US dollar reached approximately 2 million Iranian rials in the open market, a new high. Three days later, Iran's Statistical Centre reported an 84.4% annual inflation rate in August, with the annual average inflation rate at around 65%. The weakening rial has further eroded purchasing power, making imported goods and essential items more expensive.

Fuel shortages have become prevalent, with long queues in Tehran and Mashhad and many petrol stations closed. Officials blamed the disruption on panic buying due to rumors of a planned fuel-price increase and damage to oil storage facilities from Israeli strikes. Iranian leaders have increasingly depicted the economic struggle as part of the country's confrontation with the US.

Hojatoleslam Taeb, head of the Basij paramilitary force, urged a 10% reduction in petrol consumption and suggested avoiding unnecessary travel as patriotic acts. Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, recommended that young people produce goods needed by themselves and society at home. However, economics magazine editor Mohammad Taheri criticized these measures, comparing them to Mao Zedong's disastrous "backyard steel furnaces" campaign during China's Great Leap Forward.

Amirhossein Hashemi-Javid, an energy expert, attributed Iran's main economic problem to its difficulty exporting oil under the US blockade, warning that the drying up of channels for selling Iranian crude deprives the government of vital revenue while raising costs and risks associated with storing unsold oil.