From war to wallets: How Iran’s economic crisis is fuelling protests

Protests triggered by Iran’s deepening inflation crisis have entered their fourth consecutive day, spreading from Tehran’s Grand Bazaar to major cities including Isfahan, Shiraz, Mashhad, Hamadan and Qeshm as tens of thousands of Iranians — from shopkeepers and bazaar merchants to university students — take to the streets across multiple provinces.

Inflation has surged past 42% nationwide amid a collapsing rial, rapidly rising food and essential goods prices, and widespread economic hardship that even regime-aligned groups have tentatively voiced acknowledgement with.

Food prices rose 72% and health and medical items were up 50% from December last year.

"We officially recognise the protests … we hear their voices and we know that this originates from natural pressure arising from the pressure on people's livelihoods," President Masoud Pezeshkian said earlier this week.

Pezeshkian instructed the interior minister to engage in dialogue with representatives of demonstrators.

Government officials have refrained from issuing direct threats at the protesters, while state media and national broadcaster IRIB have largely avoided inflammatory coverage.

Meanwhile, reports had emerged on Tuesday of several arrests, particularly of students, but local news sources today have confirmed that the detained students have been released.

The rial, Iran’s official currency, is trading at record lows of around 1.3–1.45 million rials per US dollar on the open market, down roughly 20% in December alone.

In everyday life, Iranians quote prices in tomans, an inactive historic gold coin used before 1932 that maintains emotional significance for Iranians, where 1 toman is 10 rials — so 100,000 rials is commonly called 10,000 tomans.

Disenchantment has been brewing since the 12-day conflict between Iran and Israel in June of this year, which began when Israel bombed military and nuclear facilities in the country on 13 June in a surprise attack that assassinated prominent military leaders, nuclear scientists and politicians.

Iran retaliated with over 550 ballistic missiles and over 1,000 suicide drones, and the United States became involved by intercepting the Iranian attacks and carrying out airstrikes on three Iranian nuclear sites on 22 June — one of the most direct US attacks on Iranian territory in decades.

Iran responded by firing missiles at a US base in Qatar.

While a ceasefire deal was brokered between Iran and Israel on 24 June, the downward pressure on the economy has persisted since then due to sanctions, fiscal strain and currency instability.

Around 30 June, the Iranian rial was trading on the open market at roughly 91,500 tomans, far stronger than current levels.

Notably, the trigger for the current protests is distinctly economic — unlike previous movements centred on issues such as compulsory hijab.

The fact that the third day of protests, Wednesday, coincided with 9 Dey, a date the Iranian establishment marks as the anniversary of suppressing the 2009 post-election protests, has carried symbolic weight and further propelled the protesters.

It remains unclear whether authorities will attempt to revive old security narratives tied to that date.

State messaging during the unrest has varied: on one hand, certain government officials claimed to "recognise the right to protest," while others attempted to draw a distinction between “economic protesters” and alleged “saboteurs” or “regime changers” — a distinction that, in past episodes, has often preceded crackdowns.

As purchasing power evaporates, the number of people who feel they have nothing left to lose is growing rapidly and exponentially.

This sense of desperation has found a powerful visual expression in a viral image from the first day of protests: a man sitting unarmed on the asphalt in the middle of the street, facing security forces.

The image is eerily reminiscent of the lone man standing in front of tanks during the Tiananmen Square protests, highlighting the despair and humiliation the current crisis has caused for average Iranians.

In Iranian culture, the shame of being unable to provide for one’s family carries a particularly heavy emotional weight.

Unlike many past protest waves, authorities did not impose widespread internet shutdowns or cut mobile phone and SMS services during the early days of unrest.

However, these signals should not be interpreted as evidence of a lasting or structural change. The long-standing record of Iran’s security institutions and state media suggests that a return to repression remains entirely possible.

Videos circulating on social media — particularly from Kurdish-populated regions — show security crackdowns and the use of force, underscoring the state’s heightened sensitivity towards unrest in these areas.

While statements by government spokespersons and early moves by the Pezeshkian administration differ in tone from previous protest cycles, they do not address the underlying causes of public dissatisfaction or Iran’s deep-rooted economic crises.

While sanctions imposed by the United States and the European Union have constrained oil revenues, banking access and imports, many Iranians say the ruling elite’s continued investment in regional power projection and ideological priorities has come at the expense of stabilising prices, protecting incomes and addressing everyday economic hardship.

Fears of military escalation have intensified following the latest meeting between US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu, which lent fresh weight to Washington’s directed at Tehran.

For many Iranians, the prospect of war now looms alongside empty dinner tables — reinforcing a pervasive sense of insecurity and the feeling that national priorities are increasingly detached from the realities of daily life.

All of this is unfolding against the backdrop of years of international sanctions, largely a result of the Iranian regime's fixation on preserving regional and global influence — and its repeated involvement in conflicts and military escalations abroad — that have effectively reduced the country to an economic pariah state.

Most Iranians rely on modest public- or private-sector salaries that have failed to keep pace with inflation, informal or second jobs, and shrinking household savings.

Consumption has increasingly shifted towards domestically produced goods and basic staples, as imported products — from medicine and electronics to baby formula and spare parts — have become prohibitively expensive or intermittently unavailable due to banking restrictions and currency shortages.

Many households supplement their diets with locally grown agricultural products, small-scale farming or family support networks, while rising food and energy costs have steadily eroded purchasing power and pushed a growing share of the population into economic precarity.

While the 12-day conflict ended abruptly with a ceasefire despite the killing of senior Iranian commanders and speculation among some opposition circles that the government might collapse, in the aftermath, Netanyahu has openly stated that while Israel’s objective had not been regime change he made indirect references to “the freedom of the Iranian people.”

According to Iranian domestic media, President Pezeshkian’s visit to Chaharmahal and Bakhtiari province went ahead as planned, and he is currently in Shahrekord — a trip that had originally been conditional on the absence of “unexpected developments,” a caveat that itself reflected the volatility of the current moment."

Ultimately, it remains unclear which path Iran’s leadership will choose: opening genuine channels to address economic grievances, or reverting to familiar methods of suppression.

A recent warning by Hesameddin Ashena, a former presidential adviser, captures this dilemma. In a social media post, he cautioned that if authorities “provoke unrest, unrest will follow,” adding that continued insistence on past approaches would inevitably lead to public uprising.