Inside Iran's Economic Crisis: The Iranian Rial Plummets to 2 Million Per US Dollar

The Iranian rial has fallen to a new all-time low against the US dollar, dropping past 2 million rials to $1 on the free market after Washington launched its toughest sanctions yet in efforts to strangle Tehran’s economy. Iran’s economy has been crippled by decades of US and international sanctions, especially over its nuclear programme – the Iranian rial has crashed and inflation woes are piling up misery for people. The US-Israel war on Iran, launched on February 28, worsened the economic woes for the country of some 92 million people. To understand how much everyday items now cost, Al Jazeera tracked the prices of food, clothing and medicines on the streets of Tehran, comparing them with what the same goods cost in the days before the war.

Before the war, 2 million rials could buy about 4kg of tomatoes, half a kilo of chicken and a little less than a litre of cooking oil. Today, the same amount buys about half as much, with the average price of tomatoes increasing by 71 percent, chicken by 74 percent and cooking oil by 177 percent. The price of insulin, the baseline survival for diabetics, has shot up by 642 percent, while essential medicine like paracetamol has become dearer by 93 percent, and baby formula, largely subsidised by the government, has become costlier by 95 percent. Prices remain highly volatile, and the figures reflect average values.

For Iranian families, this has meant changing not only how much they buy, but also what they eat. Afsaneh*, a 35-year-old mother of a one-year-old who lives with her husband in Tehran, says her family’s weekly grocery bill has increased by 20 to 30 percent. “Before the war, we could think about what we wanted to do three or six months down the road, but now our only concern is making it to the end of the month with the income we have,” Afsaneh told Al Jazeera. “My husband and I both work, and we have a one-year-old child. The daily cost of childcare at daycare centres has now reached around 500,000 tomans [5 million rials or $2.5], which is difficult for us to afford.” Toman is the term Iranians use for the rial as an unofficial unit equal to 10 Iranian rials, widely used because it makes the country’s large currency figures easier to manage.

War damage has disrupted production, while a US naval blockade of Iranian ports has complicated imports and exports. While the falling rial has pushed up the cost of goods, sanctions have restricted Iran’s access to international markets. At the same time, wages have failed to keep pace. The government-approved minimum wage for the current Iranian calendar year ending in March 2027 is 166 million rials ($82). With government assistance and benefits, the figure comes to less than 220 million rials ($108). Zamir*, a 35-year-old man from Tehran who works in men’s retail fashion, told Al Jazeera that sales have dropped by 40 percent compared with last year, and he is struggling to keep his business running. “I can say that it is completely predictable that many of the people working in this market will go bankrupt before the end of winter and will have no choice but to shut down their businesses,” he says.

For those living on salaries, inflation creates another problem: the value of today’s pay can fall before the next payday. Salama*, 28, is a mother of one who works as a fisher in Hormozgan, Iran’s southern coastal province, overseeing the strategically vital Strait of Hormuz. For her, the rising cost of groceries has had a big impact. “We used to do our weekly grocery shopping for around 500,000 tomans [$2.5], but now we have to spend at least 5 million tomans [$25] for the same groceries, and we’ve had to cut back on things like meat and chicken or eliminate them altogether.” The war did not create Iran’s economic problems, but it has magnified them, leaving millions of Iranians questioning how much of a month’s necessities a salary can still buy.