Economist warns of hyperinflation as Iran’s economy deteriorates

Mohammad Hadi Sobhanian, head of Iranian National Tax Administration (INTA), told ILNA: “There is absolutely no discussion regarding the payment of taxes for overseas projects, and it is not the case that people pay taxes and the taxes are spent outside the country.”

He instead pointed to the government’s tax earmarking plan, which he said provides greater transparency in how revenue is allocated.

But leaked reports of Iran’s financial assistance to regional groups such as Hezbollah in Lebanon are fueling anger while at home, Iranians are suffering with mass unemployment and poverty.

On Tuesday, Supreme Leader Ali Khamenei met in Tehran with leaders of Palestinian Islamic Jihad, who were seeking further financial aid.

Meanwhile, Hezbollah has been expanding its network of interest-free loan funds, using Iranian support to provide financial relief to its followers.

Tehran recently allocated over $10,000 per family to Lebanese households affected by the most recent conflict with Israel, according to sources familiar with the matter. The funds were distributed among Shiite families aligned with Hezbollah.

Naim Qassem, Hezbollah’s newly appointed secretary-general, described the payments as a “gift from the Islamic Republic.”

The surge, marked by a monthly inflation exceeding 4% for the first time in the past year, has exacerbated the widespread public discontent, especially as food prices skyrocket. Hundreds of Iranian have sent messages to Iran International complaining about soaring prices.

Official data reveals that food costs are the primary driver of inflation, with rural areas experiencing a higher rate (36%) than urban centers (35.2%). Low-income households are bearing the brunt of this economic strain, particularly in provinces like Semnan, West Azarbaijan, and Hormozgan.

"The point-to-point inflation rate, indicating how much household expenses have changed compared to last year, reached 35.3% in the Persian calendar month of Bahman (ended on February 18)," said the Statistical Center. "This marks the highest inflation rate in 12 months."

Vegetables and legumes saw a staggering 16.9% monthly inflation, while fruits and nuts rose by 8.7%. Conversely, education saw the lowest monthly inflation, below 1%.

Annual inflation has risen by around 40 percent, each year in the past five years, and the rial has lost 95% of its value since 2018 when Donald Trump withdrew from the 2015 nuclear deal and re-imposed draconian sanctions on the country.

The massive depreciation of the rial and high inflation have drastically increased the cost of living, including expenses for food, housing, and healthcare and driven over 30 percent of the population below the poverty line.

Citizens engaging with Iran International have corroborated these findings, sending videos depicting a sharp rise in essential goods prices.

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  Iranians protest soaring prices and worsening economic crisis

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Speaking to state-run ISNA, economic expert Vahid Shaghaghi pointed to the influence of the US which has, under President Donald Trump's second term, renewed its 'maximum pressure' policy on Iran.

“The maximum pressure policy has resumed, and the US has gained additional experience from the previous campaign under Trump. The puzzle of sanctions is being completed, and in Trump’s new executive order, non-oil exports are also targeted,” he said.

Shaghaghi called for a coordinated response, urging the government and institutions to form a national and governmental consensus to counter the impact of such measures. “In an economic war, issues should not be perceived simplistically,” he added.

The rial’s steep decline has fueled inflation expectations, which have risen sharply since late December, when the dollar was still around 760,000 rials. Market concerns have intensified following Supreme Leader Ali Khamenei’s recent speech rejecting negotiations with the United States.

With the Iranian New Year (March 20) approaching, demand for imported goods—requiring foreign currency—is likely to push rates even higher. The price of gold has surged alongside the dollar, as Iranians seek refuge in hard assets.

For millions of Iranians, the continued currency collapse has eroded purchasing power.

Over the past five years, wages have failed to keep pace with surging costs, with the average worker’s monthly income now equivalent to just $125—far below the estimated $500 needed to cover basic living expenses, forcing at least one third of the nation below the poverty line.

This year, according to social media reports, activists in several northwestern cities, including Tabriz, Maragheh, and Ardabil, marked International Mother Language Day on February 21 by distributing children's books written in Torki on the streets. Torki is a Turkic language spoken by millions in the northwestern provinces of East and West Azarbaijan, Ardabil, and parts of Zanjan and other provinces.

Similarly, in some Kurdish cities, activists celebrated the occasion by distributing leaflets and posters to raise awareness of their cause.

The United Nations General Assembly designated February 21 as International Mother Language Day in 1999 to promote awareness of linguistic and cultural diversity and to promote multilingualism.

Iran is home to many ethnic groups, each with its own language, including Kurds, Torki, Gilaks, Baluchis, Arabs, and Turkmen. Torki, and Kurdish -- mostly spoken in western province -- have the largest number of speakers.

Children singing in Torki at a shopping mall in Tabriz, East Azarbaijan, on International Mother Language Day

There are no official statistics on the number of speakers of these or other languages, such as Arabic, which is spoken in the southwestern province of Khuzestan, or Balochi, spoken in the southeastern province of Sistan and Baluchestan.

Many members of ethnic groups, specially in urban centers, speak Persian as all education, including textbooks, is in Persian.

The government often view the demand for education in native languages as linked to separatism and suppress its organized advocacy.

Persian has been the official language of most Iranian dynasties throughout the Islamic period, including the Safavid and Qajar dynasties, whose rulers were native speakers of Torki. It has also served as the country’s literary language and lingua franca.

Activists distributing posters and leaflets in the Kurdish city of Marivan on International Mother Language Day.

Before the establishment of a modern educational system in 1925 by Reza Shah, the founder of the Pahlavi Dynasty, literacy was largely restricted to the upper class and the clergy, who ran small schools called maktab to teach literacy. In 1936, maktabs were shut down, and primary education in new public schools became compulsory for all children.

Since then, Persian has remained the sole language of government, media and education in Iran, despite Article 15 of the Constitution of the Islamic Republic, which was drafted months after the 1979 Islamic Revolution.

This article permits the use of ethnic languages in the press and media and allows for their literature to be taught alongside Persian in schools. However, the government has never implemented these provisions by incorporating ethnic languages into public education. Independent schools and language institutes are also barred from offering courses for other local languages.

While state-run provincial radio and television stations broadcast some programs in Kurdish, Torki, Arabic, Baluchi, and Turkmen, their content largely reflects the government’s Islamic ideology and propaganda.

Authorities frequently crack down on unofficial ethnic language classes conducted by volunteer “mother language” activists, particularly in Torki and Kurdish-speaking areas.

For example, on February 21, the Kurdish human rights group Kurdpa reported that seven activists had been arrested over the past year for promoting the teaching of the Kurdish language and were sentenced to a total of 16 years in prison.

Advocates for teaching ethnic languages argue that their cultures and languages are at risk due to the dominance of Persian in Iran’s educational system.

Critics, however, counter-argue that introducing education in non-Persian languages could weaken Persian’s role as the official language, threaten national unity by fueling sectarianism, complicate the education system, and increase its costs.

Iran's President Masoud Pezeshkian, a native speaker of both Torki and Kurdish, the languages spoken by his own parents, is one of the very few officials who has ever defended the right to giving official status to ethnic languages based on Article 15 of the Iranian Constitution.

He argued against critics, when he was a lawmaker, that using these languages in schools, contrary to their beliefs, could even strengthen national unity.

In the reports, people highlight the increasing pressure on their livelihoods, complaining about the lack of response to their protests and the absence of effective measures to control prices.

One viewer, sharing a video, said that they had purchased only a few kilograms of potatoes, onions, and tomatoes, and the cost of these three items had reached 7,000,000 rials, approximately one-seventeenth of the average monthly Iranian salary.

The simultaneous surge in prices and worsening economic hardship, along with leaked reports of the Islamic Republic's financial aid to its supporters in Lebanon, has drawn significant attention from Iranian citizens.

One Iran International viewer, referring to the high food prices, said in a video: "The Iranian government gives money to the Lebanese, but does not care about its own people."

On Tuesday, Ali Khamenei, the Supreme Leader of the Islamic Republic, met in Tehran with leaders of Palestinian Islamic Jihad, who visited Tehran seeking financial assistance. Meanwhile, Hezbollah in Lebanon has been opening new branches of interest-free loan funds to distribute financial aid from the Islamic Republic.

Tehran has recently allocated more than $10,000 to each war-affected family in Lebanon to help cover rent and household expenses. This aid is distributed among Shiite Lebanese who are supporters of Hezbollah.

Naim Qassem, the newly appointed Secretary-General of Hezbollah, described the funds as a "gift from the Islamic Republic."

Inflation in Iran has reached an uncontrollable level, with the Iranian Statistics Center announcing that the country’s annual inflation rate for the 12 months leading up to February 2025 stands at 32%.

100%

The Iranian currency, rial, has depreciated by more than 50% since September fueling annual inflation, which has hovered around 40% in the past five years.

Citizens hold the Islamic Republic and its policies responsible for their economic hardship and the rising cost of food and medicine.

Even Islamic Republic officials have acknowledged their inability to resolve the current crises.

President Masoud Pezeshkian referring to shortages in various sectors—including energy, which the government labels as imbalances—said:

"Do you think I have a magic box? No. Six months ago, I was walking in Parliament, and now I am the President."

Speaking at a meeting with officials in western Tehran on Thursday, Pezeshkian added:

"Everywhere we look, there is an imbalance—in water, electricity, gas, money, land, schools, and hospital beds. Demand is unlimited, and our capacity is limited."

Meanwhile, on Friday, Mohammad Jamalian, a member of Parliament’s Health Committee, said:

"Currently, 350 to 400 types of medicine are in short supply, and in the best-case scenario, such shortages will worsen within the next one to two months."