Iran International
Iran’s economy is entering the new fiscal year under the weight of a profound wartime shock, with inflation reaching levels not seen in decades and essential goods becoming increasingly unaffordable for much of the population.
Official figures released at the end of fiscal year 1404 (March 2026) show annual inflation at 50.6 percent, according to data compiled by government bodies including the parliament’s Research Center. Prices rose 5.6 percent in March alone.
But economists say the headline figure understates the severity of the crisis. The more revealing measure—point-to-point inflation—shows how sharply living costs have risen over the past year.
Government statistics indicate that prices in March 2026 were 71.8 percent higher than a year earlier, a surge that has sharply eroded household purchasing power. In major cities such as Tehran, the increase is believed to be even higher, particularly for food.
The shock has unfolded as weeks of US and Israeli strikes have disrupted economic life across the country. In Tehran, where many residents have temporarily left the city, large parts of the capital’s commercial activity have slowed sharply.
Many businesses remain closed and those who have stayed behind often limit their movements, wary of being caught in unpredictable air strikes.
Attacks on what the attackers describe as “regime infrastructure” have also begun to hit the industrial economy more directly. Recent strikes on major steel production facilities—among the country’s most important industrial employers—have disrupted supply chains and raised fears of wider job losses in manufacturing regions.
For working-class and rural families, the situation is especially acute. Following the removal of preferential exchange rates (arz-e tarjihi), monthly food inflation has climbed above 100 percent, turning basic nutrition into the central economic struggle for many households.
Economists say national averages obscure the depth of the crisis. In some food categories, the real cost of living has effectively doubled, with price increases reaching as high as 150 percent.
Labor activists told the Iranian Labor News Agency (ILNA) that the government’s electronic commodity coupon system—introduced to cushion the impact of rising prices—covers only a small portion of what they describe as the “worker’s basket” of essential goods.
The government-linked Workers’ House has called for a return to direct distribution of staples such as rice, cooking oil and sugar, similar to the rationing system used during the Iran-Iraq war in the 1980s.
Workers in high-risk industries such as construction say the government has suspended its contribution to social-security insurance quotas, leaving many without coverage as workplace accidents increase amid wartime damage to infrastructure.
In mining regions such as Tabas in northeastern Iran, thousands of workers are reportedly unable to retire because employers—under financial strain during the war—cannot pay the required 4 percent premium for jobs classified as “hard and hazardous.”
Economists and labor advocates say the government must urgently introduce targeted relief.
Proposals include special allowances for workers covered by labor law to offset soaring food prices, as well as legal intervention by the judiciary and the Social Security Organization to allow workers in hazardous occupations to retire even if employers cannot currently meet their contribution requirements.
Without such measures, analysts warn, the country risks a deeper erosion of living standards at a moment when the economic effects of war are already reshaping everyday life.
Tehran’s unveiling of a towering statue depicting the Roman Emperor Valerian kneeling before pre-Islamic Persian King Shapur I has renewed criticism of the Islamic Republic’s appeal to nationalist sentiment following the June war with Israel.
For over forty years, the theocracy purged ancient Persian history from schoolbooks, replacing it with post-Islamic narratives. But after the 12-day conflict with Israel, officials have turned to the distant pre-Islamic past to rally a divided society.
From murals of ancient kings and soldiers to patriotic songs added to Shi’ite mourning ceremonies performed before Supreme Leader Ali Khamenei, Tehran now embraces imagery once deemed heretical by its own revolutionary ethos.
'Kneel before Iran' campaign
Tehran’s Revolution (Enghelab) Square was the scene of an unusual spectacle on Friday as officials unveiled a massive bronze statue depicting Roman Emperor Valerian kneeling in submission before Sassanid King Shapur I, commemorating Iran’s victory at the Battle of Edessa (260 AD).
The event was held under the slogan “Kneel before Iran,” part of what authorities describe as a campaign to project “national unity and historical pride” following the June war with Israel.
Tehran Mayor Alireza Zakani, a staunch ultraconservative, said on X: “Enmity with Great Iran can only end in kneeling before this historic nation.”
Municipal official Davood Goodarzi said the installation would be accompanied by visual displays depicting “other victories of Iranians over foreign aggressors,” including the defeat of British forces by local commander Rais-Ali Delvari, Mirza Kuchak Khan’s resistance against Russian troops, and Surena’s triumph over Rome at the Battle of Carrhae in 53 BCE.
The goal, Goodarzi said, is “strengthening concepts such as national dignity, social unity, and Iranian identity.”
The statue, he said, would remain temporarily at Revolution Square before being moved to a city gateway “where it will stand as the first emblem of Iran before diplomats and foreign visitors.”
Unveiled women were allowed to attend the unveiling ceremony—an uncommon scene at events organized by Tehran’s ultra-hardline municipality.
The turn to the pre-Islamic past
The sharp reversal also recalls remarks once made by Khamenei. In a 2011 speech, he asserted that “all the great military victories of this nation came after Islam,” dismissing pre-Islamic accounts as “things that are not documented.”
In 1987, he had said that prophets triumphed over kings such as Cyrus and that “nothing remains of these monarchs in history but names remembered with derision.”
Nevertheless, pro-government social media accounts have now gone so far as to circulate posters equating Khamenei himself with Shapur, showing him standing with a staff as Benjamin Netanyahu and Donald Trump kneel before him. The caption reads: “You will kneel before Iran.”
'Hypocrisy'
Pro-government figures have hailed the move as a patriotic success. Conservative political reporter Hossein Saremi posted: “Today’s grand Iranian gathering showed that people and the state share one essence: Iran itself. Nothing can take our homeland away.”
Others, however, called the spectacle “hypocrisy.” Journalist Gholamhossein Pashaei wrote on X: “Every year you close Pasargadae to stop people from celebrating Cyrus Day, yet you unveil Shapur’s statue in Enghelab Square with drums and fireworks during Fatimiyya (mourning period)!”
Dissident commentator Hamid Asafi called the ceremony “a perfect snapshot of the Islamic Republic’s contradictions.”
On Telegram he wrote: “A week ago they closed Cyrus’s tomb out of fear of the crowds, and now they glorify Shapur in the same breath. The Islamic Republic fears living history but poses for selfies with its corpse.”
He added: “They know people no longer respond to rosaries and sermons. That’s why they’ve brought history back to the stage—in a controlled costume. If they can’t erase the past, they’ll try to own it.”
The irony deepened as UNESCO formally recognized Cyrus’s Charter as one of the earliest human-rights documents.
President Masoud Pezeshkian wrote on X: “Iran, the cradle of dialogue, justice, and coexistence, can still inspire peace today.”
Users swiftly replied, questioning how such pride could coexist with a government that blocks access to Cyrus’s tomb each year to those wishing to visit it on his birthday.