Prices surge, jobs disappear as war strains Iran’s economy

Tehran, Iran – Prices are surging in Iran, and millions of jobs have been lost or are on pause as the war with the US and Israel causes escalating economic damage.

Food and medicine, cars, electrical devices and petrochemical products are among many items for which Iranians needed to pay much more this Saturday, the first day of the working week, than the previous week.

A toxic mix of local mismanagement, the bombardment of Iran’s infrastructure, US sanctions and a naval blockade, as well as a near-total internet shutdown imposed by the authorities in Tehran – now in its 64th day – is pummelling the economy in the country of more than 90 million people.

The national currency, the rial, has hit a new all-time low of 1.84 million against the US dollar in the open market in Tehran. Currency deals were scant amid market volatility.

A similar situation is unfolding in other markets, where sellers and customers are unsure how to proceed in light of the uncertainty over how much worse things could get, and whether new products will come in.

Amid lowered or halted supplies, some vendors were gouging prices at speeds rarely seen during more than a decade of dealing with one of the world’s highest inflation rates.

A 256GB iPhone 17 Pro Max, priced by Apple at $1,200 in the US, was being offered at close to 5 billion rials ($2,750) by some shops in the capital. Others were simply refusing to sell.

A Peugeot 206, a modest French passenger car that is also now produced and popular in Iran, costs an eye-watering 30 billion rials ($16,500).

Imported cars are even harder to find, and are being put up for sale at even more astronomical prices, at times equalling more than five times the price on neighbouring markets like the United Arab Emirates.

Motorists make their way past an anti-US billboard referring to President Donald Trump and the Strait of Hormuz, installed on a building at the Valiasr Square in Tehran on May 2, 2026 [AFP]

State television confirmed “daily” price increases in the car market in a report on Friday, but blamed “psychological” factors linked with inflation and “fake prices” propagated by greedy vendors trying to make a profit off the turbulence.

The monthly minimum wage in Iran is currently less than 170 million rials ($92), and that is after the government raised it by about 60 percent for the current Persian calendar year that started on March 21. The government is also offering subsidies towards food and essentials worth just less than $10 per month per person.

“You look at the prices and salaries, and you see the numbers don’t add up,” said one Tehran resident who asked not to be named.

“There’s not much you can do about it except to turn the little you have into something that is not depreciating or buying something you need that you might not be able to afford later.”

‘Peaks of progress’

The government of President Masoud Pezeshkian has not provided detailed information on how many people have lost their income streams.

But from technology firms in Tehran to giant steel producers in Isfahan, most major companies operating across the country have been forced to lay off employees.

A statement attributed to Supreme Leader Mojtaba Khamenei on Friday said that the Islamic Republic has “proven to the world a portion of its remarkable capabilities in a military confrontation”.

Now, he said, the theocratic and military establishment must “disappoint and defeat enemies” in an economic and cultural struggle.

Khamenei, who has not been seen or heard from personally since becoming supreme leader after Ayatollah Ali Khamenei was killed on the first day of the war, said businesses must refrain from firing workers as much as possible, and added that Iran was “traversing the path toward the peaks of progress and advancement”.