Iran International
Escalating talk of war and renewed negotiations with the United States may dominate Iran’s political discourse, but the country’s deepening economic crisis is more present in daily life—and no less likely to drive change.
On Monday morning, the Foreign Ministry spokesman said foreign reporters visiting the country had described life as “normal.” Yet the indicators and daily experience suggest anything but.
That same day, Iranian media quoted bakers and grocers saying that wealthier customers now leave deposits so poorer families can take bread or meat without paying upfront.
Even newspapers aligned with Supreme Leader Ali Khamenei have begun issuing warnings.
Khorassan cautioned about the political consequences of rising bread prices. Days earlier, Kayhan warned that bread riots were likely if the government proceeds with plans to raise prices for a fourth time since President Massoud Pezeshkian took office in mid-2024.
Tabnak, the news site run by former IRGC commander Mohsen Rezaei, reported that a family of two or three now needs about twice the government’s worst-case estimate from last year to cover food costs.
Overall inflation is above 60 percent and expected to approach 70 percent this month. Donya-ye Eqtesad warned that food inflation could soon reach triple-digit levels. The Statistical Center of Iran reports inflation for agricultural goods above 85 percent and services above 45 percent.
Across the media spectrum, analysts point to three converging pressures: soaring food prices, wages that lag behind living costs and persistent instability in financial markets.
Specialized economic outlets report continued volatility in the foreign-exchange market. The dollar has fluctuated between 1,630,000 and 1,650,000 rials in recent days, with traders describing “high-tension anticipation” tied to uncertainty over negotiations with the United States and broader political risks.
Gold prices have surged alongside the currency, placing what has long been a traditional hedge against instability beyond the reach of most households.
The stock market has added to public unease. Shargh reported sharp index declines and heavy retail capital flight on Monday, with roughly 110 trillion rials ($680 million) exiting the market in 24 hours.
Analysts cite eroding confidence in government support policies and fears that regional tensions could spill into the domestic economy. Even those with no investments feel the consequences, as market instability feeds broader uncertainty.
Ramadan, traditionally marked by nightly gatherings and shared meals, has taken on a subdued tone. Many families can no longer afford customary foods, let alone host guests.
State television and pro-government social-media accounts now openly discuss the possibility of war. Online documentaries show Tehran’s pre–New Year shopping districts open but nearly empty. Instead of browsing, residents exchange advice on stockpiling food, fuel and clothing — precautions in case the capital comes under attack.
If this is normal, it is a fragile and increasingly costly version of it.
Habib Arian, a financial markets researcher, told ISNA that the turning point came on January 10, when the market recorded a one-day outflow of 9.4 trillion rials ($5.8 million), at the time the largest daily withdrawal of individual investor funds.
“That figure showed that trust, which is the main asset of the capital market, had been severely damaged,” Arian said. “From that date onward, the Tehran bourse was unable to return to an upward trajectory, and any positive fluctuation was treated as an opportunity to exit.”
Outflows accelerated as regional tensions intensified and speculation grew about possible confrontation between Iran and the United States. Investors shifted from equities toward hard assets, pushing the dollar above 1,650,000 rials and lifting domestic gold prices sharply.
Between January 8 and February 21, the benchmark index fell 15% while 18-karat gold posted a 33% gain over the same period. Gold-backed funds rose 20%, emerging as a primary destination for funds exiting equities.
“The 48-percentage-point gap between gold and stocks explains why liquidity has fled the equity market at this speed,” Arian said.
On Sunday alone, the main index shed another 103,000 points as retail investors pulled out a record 41 trillion rials ($25.3 million) in a single session, according to market data cited by Arian.
He said the stock market was now driven less by economic fundamentals than by political risk. “The market today is more hostage to political tensions and the shadow of war than to economic variables,” he said. “As long as geopolitical risks do not subside, the capital market will continue to act as a liquidity provider for parallel markets.”
The exodus from stocks comes against a backdrop of broader capital flight and currency weakness.
The rial has traded around 1,630,000 per dollar in recent weeks, reflecting deep structural imbalances, falling oil income and persistent uncertainty surrounding nuclear negotiations and sanctions.
Analysts say the combination of record outflows from equities, a weakening currency and rising demand for gold shows the erosion of investor confidence, with households and businesses seeking safety in assets perceived as more resilient to inflation and political shocks.
“In this environment, investors prefer the security of gold and dollar-linked assets to the ambiguity of shares,” Arian said.
