Even state media sounds alarm as Iran’s economy sinks

The euro and pound also rose sharply, passing 2.11 million rials and 2.44 million rials respectively.

Gold prices also climbed, with the benchmark Emami coin rising about 6.5% to 2.08 billion rials, reflecting the role of gold as a common store of value for Iranians trying to protect savings from the rial’s decline.

The surge comes as the US blockade of Iranian ports and the Strait of Hormuz remains in place despite President Donald Trump’s extension of a temporary ceasefire with Tehran earlier this month.

Uncertainty over talks between the United States and the Islamic Republic, Tehran’s insistence on continuing its nuclear and missile programs and support for regional proxy groups, and the broader “neither war nor peace” situation have pushed Iran’s economy into deeper instability.

On April 28, Trump said the Islamic Republic had informed Washington it was in a “state of collapse” and wanted the Strait of Hormuz blockade lifted.

The Wall Street Journal later reported, citing US officials, that Trump had instructed aides to prepare for a prolonged maritime blockade of Iran.

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Cost of living crisis

The currency jump follows weeks of worsening economic conditions inside Iran.

On February 25, the final working day before the war began, the dollar stood at 1.65 million rials, while the euro was 1.95 million rials and the pound 2.24 million rials on the open market.

Messages sent to Iran International in recent days point to a rapidly worsening cost-of-living crisis, with viewers reporting mass layoffs, sharp increases in basic goods, medicine shortages, food insecurity and inability to pay rent.

The internet blackout, now stretching into its third month, has added to the pressure by cutting off online work, e-commerce and freelance income for millions of Iranians.

One doctor told Iran International that many patients could no longer afford their medicines, citing seizure medication whose price had more than tripled even though some patients need two or three packs each month.

A former worker at the Marvdasht petrochemical complex in Fars province said he had been laid off two months ago and had reduced his household’s food consumption to one meal a day.

“I have an elderly mother and I am ashamed before her,” he said. “We have reduced our food consumption to one meal a day, and even that is barely manageable. I have not paid rent either. The situation is terrible.”

On Tuesday, Mohsen Zanganeh, a member of parliament’s planning and budget committee, said in a post on X that during a meeting on Iran’s postwar economic situation, one participant warned that the country was nearing “economic collapse.”

Tehran was supposed to be the place they came to become themselves. They got into top universities, found jobs, rented apartments with friends. They built lives of their own.

A year of protests, crackdown, war and economic freefall has pushed many to the edge. Rent has become unbearable. Prices rise by the week. Incomes shrink or disappear.

They are moving back to Ahvaz, Shiraz or smaller towns to live with family because they can no longer afford Tehran. Some are selling gold, burning through savings or taking on debt to survive one more month.

The economic shock is everywhere. Layoffs are spreading. Inflation has become so absurd that people joke shops are still full of staples only because no one can afford to buy them.

And now, as if rent and inflation were not enough, officials say metro, bus and taxi fares in Tehran will rise next month. Even getting to work is becoming more expensive.

But for many, the deepest blow has come from the collapse of the digital economy.

In Iran, Instagram was more than an app. It was a shopfront, a beauty salon, a classroom, an office. Women sold clothes and cosmetics, baked cakes, offered beauty services, taught languages, designed logos and built small businesses from their bedrooms.

Now much of that is gone.

After two months of severe internet disruption, many online businesses are collapsing. Orders have dried up. Customers cannot browse. Payments are delayed. Messages do not go through.

Sima, 29, runs a small online clothing business. For two months, she says, almost no orders have come in. What once brought in modest but steady income has become little more than an empty storefront.

Baran, 34, says she feels herself “going crazy” thinking about how quickly life is unraveling. The online business she spent years building is collapsing. Payments are not arriving. Debts are piling up.

“Everything we built with blood and tears is going up in smoke,” she says.

What makes it worse is the silence. No explanation. No accountability. Just the slow erasure of livelihoods.

Layoffs in offices and shops appear to hit women especially hard. There are no official figures, but many suspect employers assume men are more likely to be breadwinners. A woman, they think, may have a husband or father to fall back on. But many do not—or do not want to.

For many women here, losing a job is not just losing income. It can mean losing a home, a city and a life they fought hard to build.

And so Tehran is losing its daughters.

The city that once offered escape is beginning to send them back. Back to smaller cities. Back to family homes. Back to dependence—often to the lives they thought they had escaped for good.

The government’s Task Force for Food Security and Livelihood Improvement has announced that $1 billion from the National Development Fund will be allocated to import basic goods such as sugar, rice, red meat and animal feed.

The move comes alongside a broader policy decision to continue subsidizing critical imports despite earlier plans to scale back such support. It marks the second time in two years that the fund has been tapped to finance basic imports.

With reserves estimated at around $40 billion, the fund is also expected to help rebuild war-damaged industries, particularly steel and petrochemicals, highlighting growing tension over how these resources are prioritized.

'Nothing left'

For many Iranians, the strain is already becoming unbearable.

Nader, a 42-year-old film industry worker, says he has had no income since January, when nationwide protests began, and is preparing to leave his rental home and move his family into his parents’ house in another city.

“My wife’s job depended on the internet, and she has also become unemployed,” he said. “We’ve been using our savings to pay rent, but if we continue, soon nothing will be left for food or unexpected medical costs.”

The move also marks a reversal of the government’s “economic surgery” policy introduced four months ago to reduce import subsidies.

Authorities are continuing to allocate foreign currency for essential imports, including medicine, at a fixed rate of 285,000 rials per dollar—far below the open market rate of around 1.5 million rials and the official budget rate of 1.23 million.

This subsidized rate, capped at $3.5 billion, applies to critical imports including wheat, medicine, pharmaceutical ingredients and infant formula. An additional $1 billion withdrawal from the sovereign fund is intended to help sustain the system.

Wheat and infant formula remain among the government’s highest priorities because shortages or price spikes could trigger social unrest.

Rising unemployment

To offset price hikes after January’s subsidy cuts on goods such as meat and cooking oil, the government reintroduced a coupon system. Around 87 million people receive monthly vouchers, initially worth 10 million rials per person.

But their value has eroded rapidly. Monthly inflation reached 7 percent and point-to-point inflation 67 percent, according to the Central Bank of Iran.

Consumers describe day-to-day increases in the price of basic goods and services, leaving many households unable to afford necessities.

At the same time, unemployment is rising sharply.

War-related damage to steel and petrochemical hubs has left large numbers of workers jobless and disrupted downstream industries reliant on their output.

'Hunger riots'

A prolonged internet shutdown—now entering its third month—has compounded the crisis, cutting off income for millions. Tourism has also collapsed, with airlines, hotels and local accommodations nearly inactive after the 12-day war.

Even those who remain employed are watching their purchasing power evaporate.

At a petrochemical terminals company in Bandar Mahshahr, representatives for more than 700 workers say their employer has eliminated overtime, holiday pay and welfare benefits.

In some cases, workers report wages have gone unpaid for months.

Political analyst Shahin Shahid-Saless warned that a naval blockade restricting oil exports and broader trade could accelerate the currency’s collapse.

“The national currency will collapse at an unbelievable speed, and hyperinflation will emerge,” he said. “The country may face … hunger riots whose intensity and violence would be entirely different from [recent] movements.”

A widening split over how to deal with the United States has reached the deepest layers of Iran’s hardline establishment, surfacing in state-linked media and among factions that have long presented a united front under the banner of revolutionary loyalty.

The divide became unusually public this week as several ultraconservative MPs refused to sign a letter backing Iran’s negotiating team. The dispute then spilled into hardline media, triggering an unprecedented public clash between Raja News and the Revolutionary Guards-linked Tasnim News Agency.

The confrontation largely pits supporters of former nuclear negotiator and National Security Council member Saeed Jalili against allies of his longtime rival, parliament speaker Mohammad Bagher Ghalibaf, who recently led Iran’s delegation in talks in Islamabad.

On Monday, Iranian media reported that 27 members of parliament—including seven affiliated with Jalili’s ultraconservative camp—refused to sign a letter backing the negotiating team and Ghalibaf’s leadership in the Islamabad talks.

One of them, Mahmoud Nabavian, who had traveled to Islamabad with the delegation, later claimed that Mojtaba Khamenei’s “red lines” had been violated. He alleged that negotiators had engaged with the United States on nuclear issues against those guidelines.

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The divide became unusually public this week as several ultraconservative MPs refused to sign a letter backing Iran’s negotiating team. The dispute then spilled into hardline media, triggering an unprecedented public clash between Raja News and the Revolutionary Guards-linked Tasnim News Agency.

The confrontation largely pits supporters of former nuclear negotiator and National Security Council member Saeed Jalili against allies of his longtime rival, parliament speaker Mohammad Bagher Ghalibaf, who recently led Iran’s delegation in talks in Islamabad.

On Monday, Iranian media reported that 27 members of parliament—including seven affiliated with Jalili’s ultraconservative camp—refused to sign a letter backing the negotiating team and Ghalibaf’s leadership in the Islamabad talks.

One of them, Mahmoud Nabavian, who had traveled to Islamabad with the delegation, later claimed that Mojtaba Khamenei’s “red lines” had been violated. He alleged that negotiators had engaged with the United States on nuclear issues against those guidelines.

In recent days, hardline lawmakers and commentators have increasingly criticized the negotiating team.

Jalili himself appeared to escalate tensions when he called on Mojtaba Khamenei to clarify publicly whether ongoing actions reflected his directives. In a now-deleted post, he wrote that if no such message was issued, “there is one hundred percent a ‘sedition of officials,’ and all these statements are written by the coup plotter himself.”

The remark was widely seen as aimed at Ghalibaf.

The feud escalated further after a Tasnim editorial said demanding the United States lift all sanctions or agree to a comprehensive ceasefire with Iran’s armed allies in the region amounted to unrealistic expectations like a “magic beanstalk.”

The article also argued that negotiations with the United States should not be seen as a final solution and that “the power of the people in the streets” could serve as Iran’s main leverage.

Raja News published a harsh response.

Tasnim later removed the article, saying it had republished it from another outlet, but responded in an unusually sharp tone, accusing Raja of inciting division and acting against national security.

It said the outlet was “seeking to complete Trump’s project in Iran” and noted that some individuals had recently been arrested over “suspicious movements to undermine sacred unity.”

A Telegram post by Saberin News, a channel linked to security institutions, went further, labeling the Paydari Party as the Kharijites—a historical term for extremist dissenters who opposed and ultimately assassinated Imam Ali, the first Shia imam.

The post accused them of “sowing division on the battlefield” and “playing in favor of Israel and the United States.”

Iran’s state broadcaster (IRIB) has also come under scrutiny for alleged bias. Its deputy for cultural affairs, Vahid Jalili, is Saeed Jalili’s brother.

Moderate outlet Khabar Online reported that by its count, 8 out of 10 of pundits appearing on IRIB during the recent conflict have been conservatives, with 15 percent linked to the ultraconservative Paydari Front.

“The problem is not just the elimination of reformists; the data shows that even moderate conservatives or critical insiders have almost no presence in these programs,” the outlet wrote.

Raja News later said it would avoid prolonging the dispute in public and would instead pursue legal action. But as the stakes rise—whether through renewed talks with Washington or a return to war—it may prove difficult to put the genie back in the bottle.