War, Sanctions and Inflation Push Iranian Families Into a Deepening Crisis

Tehran, Iran — Iranians born during the 1980s are often referred to as the “burned generation,” shaped by the political upheaval and economic instability that followed Iran’s 1979 Islamic revolution.

The 1979 seizure of the US embassy and detention of American diplomats and other hostages for 444 days established a pattern of hostility that would dominate the following decade.

The 1980s brought eight years of devastating war with Iraq, a cultural revolution led by the fledgling Islamic Republic, executions of political prisoners, sanctions and chronic economic uncertainty.

Bardia, a 23-year-old living with his parents in eastern Tehran, says many young Iranians now believe conditions are worse than those faced by the 1980s generation. He blames intensifying sanctions for a more unstable job market and accelerating inflation.

“Becoming independent or forming a family, emigrating away, buying a home, a shop, a car or even a new phone is becoming more of a distant dream every day,” he told Al Jazeera, requesting anonymity because of security concerns.

Decades of hardship

Domestic mismanagement and corruption, compounded by outside intervention, have made life difficult for most of Iran’s roughly 90 million people, even before the war involving the US and Israel began on February 28.

Months of US bombing, intensified sanctions and naval blockades have sharply worsened conditions this year, alongside January antigovernment protests and official restrictions on public internet use.

The government raised petrol prices last week, a move likely to fuel further inflation as many fear that circumstances will deteriorate before they improve.

For Bardia, who works at a cafe in downtown Tehran while studying business administration, simply making ends meet has become a struggle.

His pensioner father drives through online ride-hailing apps using a 15-year-old, poorly maintained Iranian car. His mother, a retired garment worker, earns occasional income by sewing at home.

After government cash subsidies and food assistance, the family has about 800 million rials, or roughly $350 at the current exchange rate, each month, while expenses continue to rise.

“We buy meat maybe once every six to eight weeks,” Bardia said. The family can no longer afford restaurants or takeaway food, new clothes or household appliances, and they are hoping their medical bill will not derail their budget.

By late August, annual inflation had reached 89 percent, while food inflation stood at more than 127 percent compared with the same month a year earlier, according to the latest figures from the Statistical Center of Iran.

Iran’s currency also continued to decline, reaching a new record low of more than 1.37 million rials per US dollar in Tehran’s open market last week.

The rate modestly recovered to about 1.31 million on Sunday after Iranian media reported that an agreement with Oman on facilitating limited transit through the Strait of Hormuz might be reached before scheduled talks with regional states in Oman on Monday.

Tehran nevertheless maintains that negotiations with the US cannot begin until its conditions concerning Hormuz, the lifting of the blockade and sanctions, and other demands are met. Meanwhile, a maritime blockade has halted most Iranian oil exports, while US sanctions and regional tensions have disrupted or impeded air, land and rail routes, further burdening Iranians.

“I remember the day my dad bought a car with 10 million tomans [100 million rials – currently worth just $43]. I also remember the day my dad bought a piece of land with 10 million tomans. Today he came home with a little bit of meat and said it was 10 million tomans. I’m in shock; I’m just 24 and I’ve seen all of this!” one Iranian user wrote on X.

Videos posted online in recent weeks showing the exorbitant sums Iranians have paid for small quantities of food and other essentials have spread widely. Rather than complain, many appear to present themselves as happy, possibly out of fear that criticism or protest could lead to imprisonment or execution.

Last week, state television described such videos as “a new project” promoted by people seeking to overthrow the Islamic Republic by instigating “riots”.

‘Erosion of resilience’

After decades of pressure, Iran’s economy has shown considerable resilience amid political upheaval, sanctions, currency volatility and the Middle East’s deadliest COVID-19 wave. Yet in less than a year, Iranians have endured energy crises and two wars initiated by the US and Israel.

Iranian President Masoud Pezeshkian and several other leaders have repeatedly sought to end the current “no war, no peace” status quo, arguing that it creates uncertainty for the population and disrupts the economy.

Economist and market analyst Behnam Samadi said the status quo carries a heavy price, with political and economic uncertainty making it difficult for both government and household decision-makers to respond effectively.

“Households focus on preserving their purchasing power rather than planning for the long term; businesses set aside more resources to manage risk and maintain existing operations rather than undertake new investment; and the government is compelled to devote more resources to social support, securing foreign currency and crisis management,” he told Al Jazeera.

Many Iranians are no longer asking whether the economy is on the verge of collapse, but how long the current deterioration can continue and what it will cost.

Households are gradually changing their lifestyles and consumption habits, cutting spending on leisure, education and even healthcare, while credit purchases and instalment plans are becoming more common. In effect, they are transferring some of today’s financial strain into the future.

“Perhaps the most accurate description is that Iranian households are adapting, but this adaptation does not mean their standard of living is staying the same. A substantial part of Iran’s economic resilience is sustained through reduced consumption, lower savings and a decline in household welfare,” Samadi said.

“And this is precisely the point that requires attention: If this situation persists, what we call ‘resilience’ today may gradually turn into an ‘erosion of resilience’.”

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