By Parisa Hafezi
DUBAI, Oct 28 (Reuters) – Iranian families are cutting back on food, housing and education as the eight-month-old war with the United States fuels one of the country’s worst inflation surges in decades, eroding incomes and pushing households to the brink.
The strain is being felt far beyond the country’s major cities. Workers say wages no longer cover basic expenses, while businesses face rising costs and weakening demand as families spend most of their budgets on food, rent and other necessities.
The conflict, triggered by US and Israeli strikes on Iran on February 28 and followed by Tehran’s closure of the Strait of Hormuz and a US blockade of Iranian ports in the Gulf, has disrupted oil exports, trade and government revenues. The turmoil has compounded the impact of decades of sanctions and economic mismanagement.
Reuters spoke to more than two dozen people across Iran from different social and economic backgrounds who said worsening conditions had left them struggling to afford food, housing, healthcare and education.
“We have no money, no future and no hope. We’re tired of living in fear, fear of another US attack and fear of not being able to make ends meet at the end of every month,” said Mohammadali, a 47-year-old shopkeeper and father of two in the northeastern city of Mashhad.
Iran’s Economy Minister Ali Madanizadeh on Tuesday apologised for the mounting cost-of-living pressures facing Iranians, state media reported, saying pensioners, workers and civil servants were bearing the brunt of soaring prices and high inflation.
Iran’s inflation surge has shown little sign of easing. Consumer prices in September were nearly 90% higher than a year earlier, while annual inflation accelerated to 73.6%, according to official data and figures reported by state media.
Food prices have risen even faster. The cost of food and beverages was 121.8% higher than a year ago, forcing many families to cut spending elsewhere.
PRICES OUTPACE PAYCHECKS, JOBS DRY UP
For Mahmoud, a 44-year-old government employee in the central city of Isfahan, the gap between wages and living costs widens every month.
“With my salary of less than $100, you can survive only for 10 days … My wife and I lie to our daughters all the time when they ask for a toy or new clothes,” he said.
Official estimates put the minimum monthly cost of living for a three-person working-class family at around $336, more than three times the average monthly wage of roughly $92 at the free-market exchange rate.
As wages fail to keep pace with inflation, many families have exhausted savings, cut consumption or borrowed money to cover daily expenses. Government-mandated pay increases have been swiftly overtaken by rising prices.
For many Iranians, the challenge is no longer preserving their standard of living but avoiding financial collapse.
“We had to move to my parents’ house last month because my husband got laid off from a small tile factory in May. We spent all our savings. But my husband is still jobless and we could no longer afford rent,” said Hamideh, a 39-year-old mother of two in the northern city of Rasht.
Rising housing costs have added to the squeeze on family budgets. Rents in September were 32.8% higher than a year earlier, while housing, utilities and fuel costs were up nearly 38%, according to official data.
The pressure extends to the labour market. The official unemployment rate climbed to 9.1% in the spring, up 1.8 percentage points from a year earlier. The economic participation rate fell to 40.7%, indicating fewer working-age Iranians were employed or actively seeking work. Nearly a quarter of young people aged 15 to 24 are unemployed.
“I have been looking for work since graduating in advertising, but after months of searching I’ve started to lose hope. Companies are cutting budgets, not hiring. Most of my classmates are either unemployed or working in fields unrelated to what they studied,” said 23-year-old Firouzeh, who lives with her parents in the northwestern city of Urmia.
STUDYING ABROAD A DISTANT DREAM
The weakening rial is also closing off opportunities once seen as pathways to upward mobility. Iran’s currency has lost more than half its value over the past year, putting overseas education beyond the reach of many families.
“Both my parents are government employees. Their dream was to send me abroad to become a medical doctor. But after two years studying in Turkey, I could not pay the tuition for this year and I am returning home,” said Shahriyar, 25, in Istanbul. He said several of his friends were in the same situation.
Washington’s expanded sanctions, announced on August 24 as part of “Operation Economic Outcast” and aimed at cutting Tehran’s funding for the war, have added to the economic strain on ordinary Iranians, analysts said.
Businesses are under pressure. Sanctions and war-related disruptions have increased the cost of imports and restricted access to foreign currency and raw materials, while retailers and small businesses face higher operating costs just as demand weakens, threatening revenues and jobs.
For Iran’s rulers, the challenge is maintaining essential imports and public services while financing a costly conflict. Central Bank Governor Abdolnasser Hemmati said in mid-October that US claims Iran’s economy was collapsing were “an illusion”.
The deterioration in living standards also presents a growing political challenge for the authorities, who remain wary that worsening economic conditions could reignite nationwide unrest.
Economic grievances have fuelled repeated waves of protests in recent years, leaving officials sensitive to signs that war, inflation and rising unemployment are further eroding public patience.
The clerical establishment responded to previous outbreaks of unrest with a sweeping crackdown that, according to Iranian officials and rights groups, killed thousands in January.
(Additional reporting by Emily Giles, Writing by Parisa HafeziEditing by Ros Russell)
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