Iran International
The latest figures released by the Statistical Center of Iran offer the starkest assessment yet of the country's economy, as record inflation intensifies debate over whether the war or government mismanagement is primarily to blame.
Average annual inflation has climbed to a record 62%, while year-on-year inflation has surged to 82%, rapidly eroding household purchasing power.
Food prices remain the principal driver of overall inflation, with annual food inflation staying in triple digits for a sixth consecutive month. In July, food inflation reached 134% nationwide and 140% in rural areas. More than two-thirds of the food items monitored by the statistical agency now exceed what economists describe as crisis-level inflation.
Prices have risen sharply across other sectors as well. Household appliances are estimated to cost 114% more than a year ago, while transportation costs have climbed 103%. Economists warn that a possible gasoline price increase could push food inflation even higher by raising distribution and delivery costs.
War or government policy?
Critics of President Masoud Pezeshkian’s government, many of whom also oppose an agreement with the United States, argue that the inflation surge is rooted entirely in domestic economic policy rather than the recent conflict.
Hojjat Abdolmaleki, labor minister under former president Ebrahim Raisi, dismissed any connection between the war and rising prices.
“The war has had no effect whatsoever on inflation. Inflation has risen steadily throughout the Pezeshkian Administration, and the war’s contribution to these price increases is zero,” he said.
“Virtually all of this inflation is the direct result of misguided policies and government incompetence. Even without the war, the situation would have been the same, perhaps even worse.”
Other economists reject that assessment, arguing that both domestic policy and the conflict have driven prices higher.
Mohammad Sadegh-Alhosseini told the Iranian Students News Agency (ISNA) that domestic policies could account for inflation of between 30% and 50%, but that the increase beyond that range was linked to international tensions and the war.
Mojtaba Yousefi, a member of parliament, also said it was inaccurate to claim that the war had no effect on prices. “But it is equally wrong to attribute all inflation to the war,” he said.
Economists also caution that even an agreement between Tehran and Washington, potentially unlocking frozen assets, easing sanctions, increasing oil revenue and reducing inflation expectations, would be unlikely to bring prices down quickly.
They say chronic budget deficits, entrenched corruption and structural inefficiencies are so deeply embedded that reversing them could take years.
Even if the fighting ends, the cost of rebuilding damaged infrastructure and industry would continue to strain public finances. Conservative politician Mohammad-Reza Bahonar recently estimated reconstruction costs at $200 billion.
Purchasing power continues to collapse
The inflation surge has increasingly affected ordinary Iranians. According to a report by the Iranian Labour News Agency (ILNA), during recent months even basic staples such as chicken, eggs and bread have become unaffordable for many working-class households. Bread prices alone have risen by between 100% and 140% on average.
Official data show that prices of at least eight food items have more than doubled over the past year. Cooking oil has risen 261%, while meat prices have increased 145%.
By comparison, ILNA wrote, the minimum wage has increased by only 60%, while salaries for civil servants, pensioners, nurses and teachers have risen by between 20% and 43%, averaging roughly 30%. As a result, many of these households no longer fit the conventional definition of the middle class, the report argued.
Government food vouchers introduced in January have also lost much of their purchasing power, as authorities have left their value unchanged despite soaring food prices.
Ahmad, a retired civil servant in Tehran, said the vouchers initially allowed him to buy around ten food items. "Now I can only afford three or four."
Social media has also reflected the growing financial strain. Users report increasing numbers of people selling, or even renting out, personal belongings such as electronic devices to cover daily expenses.
Journalist Azadeh Mokhtari wrote: "When advertisements for selling hair, or even renting laptops for online classes, become more common, it means the middle class is being worn away, and the lower-income class is being pushed out of the economy."
Misery index reaches new peak
The deteriorating economic environment is also reflected in Iran's misery index, the combined rate of annual inflation and unemployment.
With annual inflation at 62% and unemployment at 9.1% in the quarter ending in June, the misery index climbed to a record 71.1%, up from 64.2% in the previous quarter. The index stood at 56.6% during the same period in 2021.
The economic burden is not evenly distributed across the country. Several provinces have recorded misery index readings above 100%, with Lorestan registering the highest level at 121.5%.
Economists say the figures reflect not only declining purchasing power and weaker job security but also rising uncertainty that makes long-term financial planning increasingly difficult for households.
Pezeshkian could not see the man beside him and later asked whether the voice he had heard had really belonged to the supreme leader, according to the sources.
Their account of the only known meeting between Pezeshkian and the Islamic Republic’s third supreme leader differs sharply from the version the president has told in public.
In mid-May, Pezeshkian told a gathering of trade association representatives that he had spent two and a half hours with the new leader “in a cordial atmosphere.” Iran International’s sources said the encounter lasted only a few minutes, after which the president was asked to leave.
The meeting itself was a concession extracted under pressure. Khamenei's office agreed to it only after repeated requests from Pezeshkian and his threat to resign, the sources said, and the president was informed that, contrary to standard practice, he would not be received at the leader's usual residence.
Instead, his security detail delivered him to an undisclosed location somewhere in Tehran. There he was taken from his own vehicle and seated in the back of a commercial car with tinted windows, where, apparently, Khamenei was already waiting. The spot was dark enough that the two men could not see each other, and Khamenei's guards did not permit a handshake. The conversation was carried entirely by voice.
The treatment reportedly angered Pezeshkian, who regarded it as humiliating. According to individuals in the president's office, he later asked whether the person beside him had in fact been the supreme leader, since he had only heard a voice in the dark.
It is unclear whether the remark was an expression of anger or genuine doubt. Pezeshkian has since requested a second meeting, this time at the leader's residence. The request has so far been denied.
A leader nobody sees
The president's uncertainty lands in a country that has neither seen nor heard its new ruler. In the roughly five months since the Assembly of Experts selected Mojtaba Khamenei to succeed his father, not a single audio recording or video of him has been released.
The silence has become a subject inside Iran's own state-aligned press. On Sunday, the website of the Hamshahri newspaper published a short video claiming that foreign intelligence services could trace any audio recording of the new leader and locate his hideout by measuring acoustic energy, analyzing the frequency signature of the electrical grid and examining background noise. The video added that spy agencies could analyze vocal-tract resonances to determine the extent of his injuries or anxiety, a claim that fed rather than calmed speculation about his condition.
The world's assessments diverge just as sharply. Three weeks ago, US President Donald Trump put the odds that Mojtaba Khamenei had been killed at 90 percent. Israel's prime minister recently said he is alive.
Even the government's own senior figures do not tell one story. "I have not seen Mojtaba Khamenei during this period, and only a limited number of people have met with him," Foreign Minister Abbas Araghchi said in a July interview with the online program The Story of the War. One day later, Pezeshkian said in a speech that the number of meetings with the leader had increased.
A resignation he cannot repeat
The strain between the president and the leader's office has since spilled into the open. In a video circulated on social media on Monday, Mohammad Bagher Kharrazi, a Khamenei family relative by marriage, said the new leader has formally warned that Pezeshkian's next resignation, after 28 threats or attempts, will be his last.
"He declared it officially," Kharrazi said, "and that is why they packed up, turned down the wick, and stopped threatening to resign."
The warning matches Iran International's earlier reporting. A knowledgeable source said in late May that Pezeshkian had sent a formal letter to the leader's office asking to step down, a resignation driven by what the president described as the Revolutionary Guards' complete control over the running of the country.
A president who cannot resign, then, serves a leader he cannot see. Five months into the new reign, Mojtaba Khamenei remains unseen, unheard and unrecorded, a ruler his own president has met exactly once, in the dark, and still cannot be certain he has met at all.
