Iran War: Is Iran’s middle class being pushed into poverty?
The war has intensified Iran’s economic crisis, squeezing household budgets, hurting businesses and raising fears that millions of middle-income families are slipping closer to poverty
The war has intensified Iran’s economic crisis, squeezing household budgets, hurting businesses and raising fears that millions of middle-income families are slipping closer to poverty. For Mina, a housewife in Iran, the war is no longer measured by air strikes or military statements. It is measured by what has disappeared from her family's dinner table. "Since the war started last year, we have become poorer every day,” she told DW. "I honestly can't remember the last time I bought red meat. We replaced it with chicken, but even chicken has become a luxury. We no longer think about saving money. We only think about paying the rent and buying food.” The International Monetary Fund forecasts Iran's economy will contract by 5.4% this year, while inflation is expected to approach 69%. The World Bank has also warned that conflict, weaker trade and prolonged uncertainty are weighing heavily on the country's economy. For economist Ahmad Alavi, a Sweden-based researcher, the war did not create Iran's economic crisis, but sharply intensified it. "Iran entered the conflict with inflation already above 40%, a weakening currency, chronic budget deficits and years of sanctions,” he told DW. "The war acted as an external shock. Damage to infrastructure, disruption of trade through the Strait of Hormuz, internet shutdowns and rising inflation expectations accelerated the collapse in purchasing power,” he said. Alavi points to official figures showing annual inflation reaching 66% and year-over-year inflation nearing 88%. Food prices have risen even faster.
Bread and cereals have increased by around 140%, meat and poultry by 135%, dairy products by more than 116%, and edible oils by over 200%. For many families, those figures have meant buying less meat, postponing medical treatment and abandoning plans to save money. Inflation in Iran is expected to reach nearly 70% in 2026 Image: Fatemeh Bahrami/AA/picture alliance The war has pushed some 4 million Iranians into poverty Economists say households often cut spending on travel and clothing first. As inflation persists, however, the cuts extend to food, healthcare and education, placing growing pressure on middle-income families that once considered themselves financially secure. Alavi says lower-income households have suffered the most but argues that the middle class is increasingly facing the same pressures. "Many salaried workers and pensioners have fallen below the poverty line for the first time because incomes have failed to keep pace with inflation.” He estimates that between 3.5 and 4.5 million more Iranians have fallen into poverty since the conflict intensified, bringing the total number of people living below the poverty line to more than 40 million. To adapt to the tighter cost of living, many households have started cutting meat from their diet Image: Fatemeh Bahrami/Anadolu Agency/IMAGO Businesses squeezed by uncertainty The pressure is also being felt by Iran's private sector. Mortaza, an Iranian trader, says regional trade routes changed rapidly after shipping through the Strait of Hormuz became more difficult. "China moved quickly to fill part of the gap left by suppliers in Dubai,” he told DW.
The BriefWire