Growing revolt: Radical inflation in Iran causing collapse of large middle class
Recent data from the International Monetary Fund amounts to more than just an economic alarm bell for Iran – it marks the Islamic theocracy’s descent into a new phase of structural collapse.
In 2025, Iran ranked among the top three countries with the steepest currency devaluation. This is not about routine monetary fluctuation, but rather a deliberate and sustained shift of wealth from the public to the state apparatus, driven by chronic high inflation and uncontrolled money printing. In this system, inflation is no longer a side effect – it becomes the core mechanism for financing the state in the absence of reliable revenue.
When viewed not through abstract statistics, but through everyday experience of the people of Iran, the crisis becomes strikingly tangible and extreme: Since January 2025, approximately 31 cents of every dollar in real savings has evaporated. This erosion isn’t due to personal choices; it stems from the ruling regime’s monetary and fiscal policies that function as a very steep yet invisible tax, imposed without transparency, consent or accountability. The widespread public belief that inflation is a form of “systematic theft” is not mere rhetoric – it reflects a widely and deeply understood reality.
The collapse of Iran’s currency has dealt a severe blow to household economies, extending beyond finances to psychological and social dimensions.
As of December 2025, over 80% of Iranian households live below the global poverty line. What was once an economic emergency is now becoming near-universal crushing poverty. The growing gap between income and cost of living is no longer perceived as “temporary.” A family of three in Tehran needs between $520 and $650 per month to survive, while the minimum wage – even with benefits – for a married worker barely reaches one-third of that. So what is occurring in Iran is not just – in cold economic terms – a “decline in consumption”; it’s the relentless erasure of dignified life.
For example, in 2025 food prices rose by a staggering 66%, and for essentials like bread and grains, inflation surpassed 100%.
Reports estimate that nearly 7 million people in Iran live in total poverty, suffering from chronic hunger, while tens of millions more are hanging on. Poverty in today’s Iran is no longer the exception – it has become the prevailing condition.
The vanishing middle class
Forecasts for 2026 from international institutions affirm this dire trajectory. The World Bank projects a further –2.8% economic contraction, indicating even deeper recession, widespread industrial shutdowns and rising unemployment. The government is grappling with a chronic budget deficit rooted in structural imbalances: declining oil revenues under international sanctions, no access to foreign credit and an inability to collect taxes from an economy locked in recession. In such conditions, printing money becomes the final – and most destructive – policy option, perpetuating inflation and pushing the middle class further into poverty.
What’s unfolding is not just economic decline, but the unraveling of a crucial social layer. The erosion of Iran’s middle class means the collapse of “social capital” and an upsurge in hopelessness, depression and suicide. After all, today’s crisis is not solely economic; it is simultaneously a psychological and societal rupture that, according to many experts, has yet to reach its apex. The “coming winter” is not a seasonal metaphor – it is a diagnosis of what comes next.
The ‘blessings’ of sanctions and the logic of middle-class attrition
Against this backdrop, Iranian Foreign Minister Abbas Araghchi’s statement about the “blessings of sanctions” reveals more than a controversial opinion – it unveils a strategy of governance rooted in social attrition. Sanctions are no longer viewed by the regime as external pressure, but as a tools for exhausting civil society and delaying revolutionary unrest. While this may offer short-term stability for those in power – by draining the public’s capacity to resist – it ultimately eliminates any sense of future for the people. According to a former senior official in Iran’s Planning and Budget Organization, Supreme Leader Ali Khamenei considers public welfare a threat to political compliance.
Strategic goals vs. survival of Iran’s people
At the same time, the regime’s unyielding commitment to its missile and nuclear programs exposes the widening disconnect between Iran’s strategic ambitions and the urgent, life-and-death needs of its population. Military officials confirm that missile production continues unabated, and Khamenei has rejected outright the U.S. condition of “zero uranium enrichment” – a concession that could ease sanctions.
This resource prioritization reflects a profound structural truth: For Iran’s ruling regime, preserving its own continuity takes precedence over preserving the survival of its citizens. This misalignment lies at the heart of prolonged sanctions and Iran’s ever-worsening economic collapse.
Resistance units: Carriers of hope
In recent years, Iran’s rulers have tried to intentionally cultivate an environment of distrust, despair and political paralysis, particularly among the nation’s middle class. Systemic repression, economic hardship, water scarcity and air pollution have all been employed to erode civic engagement. Yet since 2016, so-called “resistance units” – reportedly established by the main opposition People’s Mojahedin Organization of Iran (PMOI/MEK) – have remained active across the country. Despite arrests and executions, their presence continues to expand. These groups, who played a visible role in the 2022 protests, define their mission as resisting repression and reviving public hope. In a climate where civil activism is met with brutal crackdowns, their actions aim to keep the possibility of change alive.
Defying repression through symbolic action
Faced with an unprecedented surge in state violence – including 357 executions between November 22 and December 21, 2025 alone – resistance units have engaged in symbolic acts of defiance. These include setting fire to regime-affiliated centers or even Islamic Republic emblems in citizens’ neighborhoods. Reports indicate more than 3,000 such operations, along with tens of thousands of other acts of public messaging, occurred last year. While these acts may not alter power dynamics directly, they do help restore a sense of agency and resilience within Iranian society.
Peace requires freedom
As the war in Gaza and other regional crises have demonstrated, the Islamic Republic of Iran remains a key source of instability in the region – from sponsoring proxy forces to pursuing military escalation to blocking diplomacy. In this context, regional peace seems increasingly tied to internal political change in Iran. The Iranian resistance thus emerges as a player of incalculable importance for the region, and indeed, the world.