Iran’s currency slide pushes costs as household purchasing power falls

As US attacks across Iran continue, the country’s economy is facing a combination of currency depreciation, high inflation, trade restrictions and declining purchasing power.

The US dollar is currently trading at around 230,000 tomans, a sub-unit of Iran’s official rial currency, with one toman equal to 10 rials. The currency slide has pushed up import and raw-material costs, while declining purchasing power is increasingly forcing Iranian households to rely on instalment purchases and government support, according to an analysis published by the Iranian news outlet Iran News Wire, that reports from outside the country. 

According to their coverage, industries are also reporting weaker demand and higher supply costs. They cite a series of Iranian economic reports, which show that after moving above 230,000 tomans, the dollar recently traded at around 229,600 tomans on the free market. 

Meanwhile, the inflation rate used in calculations for the instalment-purchase market has reached 89%, while food inflation from the start of the government’s subsidy-credit program through the end of Mordad was reported at around 84%.

The widening gap between supply capacity and consumer purchasing power has become one of the clearest signs of stagflation across different parts of Iran’s economy, with prices rising while real demand weakens.

The outlet points to one of the clearest indicators of declining purchasing power, namely the expansion of instalment buying. Reporting by another Iranian news outlet shows that deferred-payment purchases have evolved from a tool for buying expensive goods into a more common means for households to meet everyday needs.

In the cases examined, the effective interest rate on instalment car purchases was 71%, while four-instalment purchases carried an effective rate of 32%. The effective interest rate for jewellery and some electrical appliances was around 95%, while for mobile phones it reached as high as 205%.

Cost pressures are also evident at the start of the school year. A field survey estimated the cost of preparing a primary-school student for the new academic year at between 11 million and 15 million tomans, equivalent to around 45% of a worker’s monthly minimum wage.

The price of paper and cellulose-based materials has risen by around 100%, while the head of the Stationery Union said around 60% of market demand is supplied by domestic production. Domestic producers, however, remain dependent on imports for some raw materials and are therefore exposed to currency fluctuations and problems with foreign-exchange allocation.

In the food market, the government is also considering increasing its subsidy-credit allowance by 300,000 to 500,000 tomans, or 30% to 50% above the existing one-million-toman allowance.

A report by the state-aligned Khorasan newspaper, however, said food inflation from the end of 2025 through the end of August was around 84%, while overall inflation over the same period stood at about 61%.

A useful next step would be to tighten the opening further if this is intended for a fast-moving international news story, especially around the relationship between the military conflict and the economic figures.

By Nazrin Sadigova