Conflict drives rising living costs in Iran

Tehran’s households are feeling the pinch as regional tensions and international sanctions converge to drive up the cost of everyday goods. Since the escalation of the Israel‑Hamas conflict in October 2023, Iran has faced heightened diplomatic isolation, prompting a new round of U.S. and European sanctions that target its oil exports and financial institutions. At the same time, the prolonged war in Ukraine continues to disrupt global grain supplies, forcing Iran to import more wheat at higher prices. The combined effect has pushed the national inflation rate to 48 % year‑on‑year in July, while the rial has lost roughly 30 % of its value against the dollar since the start of 2024, making imported food, medicine and fuel increasingly unaffordable for ordinary Iranians.

The rising prices are evident across the market: a kilogram of rice now costs about 2.5 times its 2022 level, and gasoline, already subsidised, has seen a 20 % price hike after the government reduced subsidies to curb budget deficits. Retailers report longer queues and reduced stock as importers struggle with limited foreign currency access. Analysts attribute the trend to the dual impact of external pressure—sanctions limiting revenue and supply chain disruptions—and internal fiscal strain from war‑related spending. Unless diplomatic channels ease and sanctions are lifted, economists warn that the cost of living could continue to climb, further eroding household purchasing power in Iran.