‘We aren’t meant to just exist’: Iranians lament soaring costs as inflation bites

Inflation is a broad, continuing rise in prices. As prices increase, each unit of money buys fewer goods and services. It matters because households must spend more to maintain the same standard of living, while businesses face higher costs and uncertain demand.

The article gives a clear example. A kitchen cloth that cost 22 cents several months earlier now costs US$1.10. That is five times more. Food prices have more than doubled since last year, while official inflation was nearly 90 per cent year-on-year in September.

Inflation can squeeze both sides of a market. Shoppers reduce purchases because wages do not keep pace. Businesses may raise prices to cover rent, utilities, imports, and wages, which can further weaken demand. In Tehran, sellers report smaller purchases, empty shops, and customers leaving without buying. Stabilising the currency could help businesses plan and limit further price shocks.

The increase has been severe across food, currency, and wages. Food prices have more than doubled since last year. Official inflation reached nearly 90 per cent year-on-year in September. These figures show that everyday costs are rising much faster than many people’s ability to pay.

The rial traded at around 2.7 million to the dollar on the unofficial market during the past week. Before the war, it traded at about 1.7 million. The minimum monthly wage, around US$120 a year ago, had fallen to US$65. A weaker rial makes imported goods and many locally sold products more expensive.

Together, these changes reduce living standards. A worker may still receive a monthly wage, but that wage buys less food, clothing, transport, or leisure. The article records shoppers abandoning purchases, cutting fruit from their diets, and losing the ability to afford holidays. Businesses also face higher costs and weaker demand.

When prices rise faster than incomes, people cut purchases or stop buying altogether. That reduces sales for shops and income for workers. Businesses then struggle to pay rent, utilities, suppliers, and employees. The result can be a damaging cycle of weaker demand, layoffs, closures, and further job losses.

Nasir says customers who once bought two to five kilograms of nuts now buy one kilogram or half a kilogram. Sportswear seller Ali Nowruzi orders only a few items for display because his warehouse is empty. Mechanic Mojtaba Rezaei says his customers have fallen to one-tenth of their previous level.

The current reality is visible across the bazaar. Many shoppers leave without buying, manufacturers are reportedly going bankrupt, and shops are closing or reducing staff. Nowruzi says his business has no future plan and that poor demand effectively means bankruptcy. Without greater stability, businesses may keep shrinking while households lose access to jobs and goods.

The dollar exchange rate tells businesses how much local currency is needed to obtain dollars. When that rate changes suddenly, the cost of imported goods, materials, equipment, and transport can change before a shop sells its existing stock. Businesses cannot easily know whether today’s revenue will replace tomorrow’s inventory.

The article reports that the rial traded at around 2.7 million to the dollar, compared with about 1.7 million before the war. Sellers therefore face uncertainty when pricing goods. A price that covers costs today may produce a loss after the rial weakens and replacement stock becomes more expensive.

This uncertainty affects planning as well as prices. Nasir asks authorities to stabilise the exchange rate so businesses can plan ahead. Ali Nowruzi says his business has no plan for the future. Shops order fewer goods, keep warehouses empty, and may raise prices defensively, but higher prices can discourage already weakened customers.

Sanctions can make trade, payments, investment, and access to supplies more difficult. They can weaken economic activity and reduce the resources available to support a currency. The article says Iran’s economy had already been battered by years of sanctions before the recent conflict added further strain.

The conflict began in February with US-Israeli attacks and an American blockade of Iran’s ports, according to the article. It says inflation reached nearly 90 per cent year-on-year in September, food prices more than doubled, and the rial weakened sharply. These pressures raised the costs of everyday goods.

The impact reached national output and ordinary life. Official figures showed GDP contracting 10.1 per cent year-on-year between late March and late June. Shoppers bought less, businesses reduced orders, and manufacturers laid off staff or closed. Iran’s economy minister rejected predictions of imminent collapse, but the article describes widespread uncertainty and a strong demand for stability.

To slow inflation, a government or central bank can reduce excessive money growth, raise interest rates, and limit deficit financing. A government can also control wasteful spending while protecting vulnerable households. These steps aim to reduce pressure on prices without removing essential support.

To stabilise a currency, authorities may use foreign-exchange reserves, clearer exchange-rate rules, and credible economic policies. They can also improve exports, restore trade channels, and remove supply bottlenecks. Targeted support for food or low-income households can protect living standards, but broad subsidies may become costly if poorly designed.

The article does not describe an official stabilisation package. It records Nasir’s request to stabilise the currency and the dollar exchange rate. Any response would need to address both inflation and confidence. If people and businesses expect further currency losses, they may raise prices, avoid long-term plans, or convert savings quickly, making stability harder to achieve.

Purchasing power measures the goods and services that income can buy. It depends on both the amount of money received and the prices of things people need. If prices rise faster than wages, purchasing power falls even when a worker’s paycheck is unchanged in local-currency terms.

A falling currency makes imported goods and dollar-linked costs more expensive in local money. Businesses often pass those costs to shoppers. In the article, food prices more than doubled, and a kitchen cloth rose from 22 cents to US$1.10. The minimum monthly wage fell from about US$120 a year ago to US$65.

That loss changes daily choices. Azadeh says she has stopped buying some fruits and can no longer afford holidays. Other shoppers leave the bazaar without purchases, while businesses lose sales. A wage therefore cannot be judged only by its numerical amount. Its real value depends on how much food, clothing, services, and leisure it can command.