Excessive inflation, forex collapse and hovering meals costs: The damning numbers behind Iran’s financial implosion

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Your assist makes all of the distinction. Learn extra T he Iranian authorities has imposed a lethal crackdown on protests in Iran, with greater than 2,400 protesters killed prior to now fortnight.

The protests started late final month when a forex crash led 1000's of Iranians to take to the streets, spiralling into probably the most critical menace to the regime in years.

The nation’s financial collapse is obvious within the worth of its native forex, the rial. Morningstar knowledge exhibits it was round 42,000 rial to the greenback again in mid-December; quick ahead to at the moment and it’s greater than 1.1m rial to the greenback, having been as excessive as 1.4m simply days in the past, an all-time low.

In buying energy phrases of products from exterior the nation, cash is out of the blue price subsequent to nothing for Iranians. Internally, the image isn’t a complete lot higher.

Iran has suffered from persistently excessive inflation for plenty of years, however prior to now 12 months it has reached near-unfathomable ranges. It jumped from 31.8 per cent in January 2025 to 48.6 per cent by October, per the Statistical Centre of Iran, through Buying and selling Economics. December’s determine has been cited as above 42 per cent.

Annual inflation was in extra of 32 per cent for the newest obtainable full yr (2024), knowledge from the World Financial institution exhibits, putting it ninth-highest on the earth for that yr. Since 2008, Iran has solely seen inflation charges beneath 25 per cent in 5 of 16 years.

<img src="https://static.independent.co.uk/2026/01/14/10/14/TOPSHOT-IRAN-PROTEST-RIGHTS-o5pw8z9s.jpeg" srcset="https://static.independent.co.uk/2026/01/14/10/14/TOPSHOT-IRAN-PROTEST-RIGHTS-o5pw8z9s.jpeg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2026/01/14/10/14/TOPSHOT-IRAN-PROTEST-RIGHTS-o5pw8z9s.jpeg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Cars set on fire during a protest on Saadat Abad Square in Tehran" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Vehicles set on hearth throughout a protest on Saadat Abad Sq. in Tehran (UGC) That fixed strain on rising costs means residents’ financial savings and spending energy have diminished with regularity, whereas The New York Instances has reported shopkeepers being “enraged” on the preliminary forex crash on 28 December. There are additionally experiences of Iran’s president, Masoud Pezeshkian, ordering month-to-month funds to Iranians and acknowledging they're struggling.

Rising inflation signifies that cash loses its spending energy over time: as costs of products or providers rise, the identical quantities of cash can purchase much less of it.

One strategy to fight that's to carry money in financial institution accounts paying rates of interest above the speed of inflation, however that's unlikely to be attainable with the nation’s Central Financial institution holding charges at 23 per cent, which means native forex money will proceed to see shopping for energy eroded as time goes on.

Native circumstances round meals manufacturing and the necessity to import primary items imply the forex collapse was a last straw for a lot of within the nation, defined Simon Phillips, managing director at No1 Forex.

<img src="https://static.independent.co.uk/2026/01/14/08/Iran_Protests_Death_Toll_48846.jpg" srcset="https://static.independent.co.uk/2026/01/14/08/Iran_Protests_Death_Toll_48846.jpg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2026/01/14/08/Iran_Protests_Death_Toll_48846.jpg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="A violent crackdown on protesters is thought to have killed as many as 2,400 people" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

A violent crackdown on protesters is believed to have killed as many as 2,400 folks (UGC) “Iran’s forex was the spark that lit the tinderbox of resentment among the many Iranian folks. The rial has been weak for years, held again by alleged widespread corruption inside Iran and worldwide sanctions from with out. A weak forex makes imports dearer, and Iran imports a lot of life’s fundamentals – together with meals and medication,” he stated.

“Issues went from unhealthy to worse on the finish of final yr. Over the previous six months, the rial has slumped 64 per cent, based on official trade charges, and this has despatched the costs of staples like wheat and cooking oil by way of the roof.

“After 5 years of drought, Iran’s farms can’t produce sufficient to feed the nation, and the hovering costs of meals imports have hit the Iranian folks arduous. Such excessive ranges of inflation worn out the worth of individuals’s financial savings and left many Iranians struggling to afford meals – and this created a way of desperation that exploded into protests.

<img src="https://static.independent.co.uk/2026/01/14/7/08/Aftermath-of-country-wide-protests-in-Iran-b5hgi3i9.jpeg" srcset="https://static.independent.co.uk/2026/01/14/7/08/Aftermath-of-country-wide-protests-in-Iran-b5hgi3i9.jpeg?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2026/01/14/7/08/Aftermath-of-country-wide-protests-in-Iran-b5hgi3i9.jpeg?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Burnt out cars were pictured during the protests" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Burnt out vehicles have been pictured through the protests (WANA) “Currencies are the lifeblood of worldwide commerce, however as Iran’s painful expertise exhibits – they matter to everybody.”

As for Iran as a nation, Neil Wilson, investor strategist at Saxo UK, defined how the scenario has no clear path to financial stability.

“It is virtually nugatory now [as a currency]. The acute instability internally, being near financial collapse and the implications of strangulation of oil exports imply it has no actual worth. It’s a proxy for the financial woes which have led to latest protests and the hyperinflation from its collapse solely makes it more durable for the regime to go on,” he instructed The Impartial.

“We predict it goes past redenomination – the same old salve for financial collapse and hyperinflation. With the regime remoted and no international locations prepared to commerce with Iran past China and Russia, the rial is successfully nugatory in international monetary markets. It’s unclear whether or not there's a path to stabilisation whereas political instability and unrest proceed.”