A recent report by the Research Center of the Iranian Chamber of Commerce paints a grim picture of Iran’s economic state. By the end of 2021, approximately 32 million people—nearly 40% of the population—were living below the food poverty line, with this figure expected to rise further due to the severe inflation of recent years.
Inflation’s Roots and Impact
The report, published on November 16, examines Iran’s inflation crisis from two perspectives: monetary policy and exchange rate dynamics. It highlights a key concern: Iran’s annual inflation rate has averaged 20% over the past 44 years. This persistent inflation, according to the Iranian Chamber, renders discussions about economic growth, investment, or production largely futile.
Inflation has exacerbated poverty levels dramatically. In 2017, the Ministry of Welfare estimated that 18 million Iranians lived below the food poverty line. However, following the inflationary shocks of 2018 and 2019, this number surged to over 26 million by the end of 2019. By 2023, the poverty rate had climbed again, reaching 30.1%, according to an October report by the Parliament Research Center.
The Cycle of Poverty
The expanding poverty line has created a dire economic environment where families increasingly struggle to afford basic needs. The Ham Mihan newspaper highlighted this crisis in a November 17 article titled “Installment Life.” The report described how families are forced to purchase essential items such as meat, poultry, and dairy on installment plans or forego them altogether.
Other goods, including rice, detergent, pasta, cooking oil, and even electronic devices, clothes, and cosmetics, have become luxury items for many households. The article also noted a surge in the second-hand market, where previously discarded items are now being sold to make ends meet.
Mismanagement and Systemic Failures
Economic experts largely attribute Iran’s inflation crisis to poor governance and systemic inefficiencies. The Research Center of the Iranian Chamber emphasized that while inflation is partly driven by monetary factors—such as liquidity growth, budget deficits, and the lack of central bank independence—its roots also lie in structural issues. These include a bloated government, an inefficient budgeting system, and the reliance on money creation to finance deficits.
The Chamber cautioned against oversimplifying the causes of inflation, warning that attributing it solely to liquidity growth risks misleading the public and exacerbating political tensions.
Rising Costs and Economic Despair
The rising cost of living has placed unprecedented pressure on Iranian households. In September, the Donya-e-Eghtesad newspaper reported that the poverty line for a family of three in Tehran had reached 20 million tomans per month. Economic experts estimate that around 26 million Iranians now lack the means to meet their basic needs.
Earlier this year, the Etemad newspaper reported a 10% increase in poverty over two years, adding roughly eight million people to the ranks of the impoverished. The report warned that the non-poor population is increasingly at risk of slipping below the poverty line, while the government’s ability to extract resources from this group is diminishing.
A Bleak Outlook
Iran’s economic challenges are not new, but their severity is growing. Decades of mismanagement, compounded by international sanctions and internal political struggles, have left millions struggling to survive. Without meaningful reforms, the cycle of inflation and poverty will continue to deepen, further eroding the country’s economic and social stability.
The Iranian Chamber’s report underscores a stark reality: without addressing both the structural and monetary causes of inflation, any hope for economic growth or poverty alleviation will remain a distant dream.
