Iran's economy reels under war and sanctions as families cut back

Tehran's grocery stores remain well-stocked, but for many families, the basics are slipping out of reach. With unemployment climbing and the rial losing half its value in a year, Iranians are working longer hours for less purchasing power, forcing them to cut back on food, medicine, and nearly everything else except heavily subsidized gasoline.

Ahmad Karimi, a 52-year-old taxi driver and father of two, says he now works 15-hour days just to get by. "We're cutting out fruit, we're cutting out protein, we've given up leisure, we even work on weekends," he said.

Nearly six months into the war with the United States and Israel, sanctions and a naval blockade have made it extremely difficult for Iran to export oil, its most valuable product. The economic pressure has yet to force military or political concessions, and experts remain skeptical it will. Iran has responded by attacking oil-rich neighbors, striking U.S. bases, and disrupting shipping in the Strait of Hormuz — its key strategic lever.

Tehran is using this retaliation, which has driven up global energy prices, to push for sanctions relief and greater control over the strait. The Trump administration, meanwhile, has vowed to impose even tougher sanctions, but analysts say Iran has decades of experience circumventing them through domestic production, informal trade networks, third-country purchases, and a shadow fleet for oil exports.

"Iran's resistance capacity not only avoids collapse, it also prevents the economic pain from translating into the political pressure and changes that the U.S. expects," said Hadi Kahalzadeh, an expert on Iran's economy at Brandeis University.

At Tehran's Grand Bazaar, shoppers hunt for cheaper staples than at grocery stores, where rice is 60% more expensive and beef 150% costlier than before the war. A mother of two from northern Iran posted on X that a basket of milk, eggs, toilet paper, and a few other items — no meat — cost 89 million rials, about $65.

"Buying basic necessities has become our main priority, and our shopping basket has gotten smaller and more limited," she said, speaking on condition of anonymity for fear of retribution. "Every time we have to say no to our children... it's genuinely exhausting."

The International Monetary Fund projects inflation will reach nearly 70% by year's end, with the economy forecast to shrink by more than 5%. Even subsidized gasoline may not remain cheap forever; a presidential aide told state television last week that consumption now exceeds production, and prices may need to rise — a move that has sparked protests in the past.

Iran's leaders were already facing economic discontent before the war began on Feb. 28. Protests earlier this year were violently suppressed, with thousands killed and tens of thousands arrested. Now, some of that frustration has shifted toward the countries behind the sanctions and attacks, says Tehran-based economist Hassan Golmoradi. "Despite the hardships and difficulties, they have shown considerable patience," he said.

Anti-government protests remain punishable by death, and many Iranians see little point in joining them. "They do suffer, but they do not think that by joining violent protests they can achieve something," said Mohammad Farzanegan, a professor of Middle Eastern economics at the University of Marburg.

On Wednesday, Trump threatened the "most crushing economic operation ever taken against any country," including secondary sanctions on nations and companies doing business with Iran. The UAE, long a conduit for sanctions-busting trade, announced this week it would suspend all dealings with Tehran.

President Masoud Pezeshkian's government favors a negotiated end to the war, citing concerns over livelihoods. But the Revolutionary Guard, strengthened after surviving airstrikes that killed top leaders, is pressing for greater concessions, including control over the Strait of Hormuz and financial compensation. Supreme Leader Ayatollah Mojtaba Khamenei recently appointed a former Guard commander to head the Supreme National Security Council, signaling a hard-line approach.

Official unemployment stands at 9.1%, though state media suggest the real figure is far higher. A Labor Ministry official said more than 1 million jobs were lost in the first three months of the war. In a rare nod to public sentiment, the government has relaxed enforcement of mandatory hijab rules.

But for many, the economic strain dominates. "The people won't be able to continue living like this," said Karimi. "We're simply breathing, surviving, and trying to make it from one day to the next."