High and volatile inflation has been persistent in Iran, leading to rising poverty levels and social tensions. For average Iranians, inflation means that everyday items, such as food and other necessities, become more expensive.
In recent years, the country has faced significant inflation challenges, with average inflation rates reaching as high as 45.2% over a 12-month period. State media are now talking about inflation rates as high as 70%.
The underlying factors of inflation in Iran include persistent budget deficits, reliance on a single-product economy, perversive state corruption and embezzlement, the deterioration of economic infrastructure, and the lack of an independent private sector.
Iran’s economy is plagued by stagflation, where both prices and unemployment levels increase simultaneously. During recessions, the economy experiences severe deflation and stabilizes when inflation is controlled. Factors such as liquidity growth, low oil revenues, trade deficits, and the regime’s budget deficits contribute to stagflation in Iran’s economy.
In the global context, it is common to tackle recessions with inflation. Small levels of inflation are perceived as a driving force for production, while inflation is countered with economic stagnation. However, when both problems emerge simultaneously within the same country’s economy, it becomes highly challenging to resolve them as treating one issue can negatively impact the other.
The regime’s extensive expenditures on activities such as funding regional wars or assisting terrorist groups like Hezbollah, Hamas, Ansarullah, and Islamic Jihad, among others, divert significant financial resources away from domestic development and economic stability.
The regime’s involvement in foreign conflicts and its financial commitments to these endeavors, along with the associated costs of nuclear projects, has further strained the economy and contributed to inflationary pressures.
For instance, the “Ghiam ta Sarnegouni” group [Persian for Uprising to Overthrow] exposed documents that revealed the Assad regime in Syria owes the Iranian regime $50 billion. However, the exact amount of Assad’s debt is not accurately reflected in the disclosed documents, and many Iranian officials have stated that the regime is running economic projects in Syria to compensate for these debts. But the income is rather used to fuel the same cycle all over again.
The Iranian regime’s allocation of significant resources to its nuclear project has had severe financial and economic consequences for the people of Iran. While specific statistics on the economic calamity caused by this investment may be disputable, it is evident that the regime’s pursuit of nuclear capabilities has diverted substantial funds away from critical domestic needs and development initiatives.
On March 11, 2021, Ali Akbar Salehi, former assistant to the regime’s President and head of the Atomic Energy Organization, claimed the total budget of the AEOI over the past 30 years was $6.5-7 billion. Meanwhile, former President Mahmoud Ahmadinejad said on May 11, 2018, that the regime’s nuclear activities had cost the country more than $30 billion. Moreover, Alireza Namwar Haghigi, a former advisor to the Minister of Culture, stated that the nuclear program has cost Iran approximately $2 trillion.
This allocation of resources to the nuclear project has contributed to economic strain, including high inflation rates, and deprived the country of investment that could have been used in social welfare programs and infrastructure. The regime’s decision to prioritize advancing its nuclear enrichment activities has also triggered international condemnation and sanctions that have further hurt the country’s ailing economy.
Despite being one of the world’s richest countries regarding natural resources, Iran now holds world records in numerous negative economic and social indicators, leading to an unprecedented level of social outrage that brought the nation to an explosive state.
Many high-ranking officials within the regime have warned about the economic situation and deflation. However, the regime’s leadership does not want to curb inflation effectively, as it believes uplifting the public from a certain level of economic misery will only further raise their demands. Consequently, it is pushing the nation toward more dangerous levels of rage that will eventually become too powerful to be oppressed.
Four decades of hardship in Iran have been accompanied by bitter experiences of various political maneuvers such as the fake “restoration” or “reformist” movements that failed to deliver on promises of prosperity and economic and social well-being.
Now, the Iranian people have realized that the only obstacle to their demands and normal life is the regime itself, and it must be removed entirely.
