Protests in Iran are no longer isolated episodes tied only to specific political events. They’ve become a recurring expression of deep economic imbalances that have accumulated over many years.

Economic forces – from currency collapse and persistently high inflation to weak growth and international sanctions – form the solid ground on which any social or political spark can quickly ignite a broad wave of anger.

The latest surge in tension came amid a sharp fall in the rial’s exchange rate. According to international reports, the dollar in the parallel market approached about 1.4-1.5 million rials in early 2026, an all-time record. Reuters reports that the rial has lost more than 90 percent of its value since the reimposition of U.S. sanctions in 2018. This collapse isn’t an abstract financial issue; it immediately feeds into prices in an economy that relies in part on imports, whether consumer goods or production inputs.

This is a locator map for Iran with its capital, Tehran. (AP Photo)

Inflation is the most painful channel through which the crisis reaches society. According to International Monetary Fund (IMF) estimates, average inflation in Iran reached about 41 percent in 2023, with higher rates recorded in subsequent periods. Data published on international economic platforms show that annual inflation approached 49 percent in the fall of 2025. The IMF also expects average inflation to remain above 40 percent in 2026, meaning the loss of purchasing power isn’t a temporary shock but a near-permanent condition.

These figures explain why many Iranians feel that wages are “evaporating.” Even with nominal pay raises, real wages continue to decline.

Media reports citing official Iranian data indicate that rents in Tehran rose by about 34 percent year on year in one recent period, while food prices increased faster than overall inflation. Some media estimates, quoting officials in commercial sectors, say food prices rose by more than 60-70 percent over a year during certain periods, with variations depending on the composition of the food basket and the time frame – underscoring the intensity of the cost-of-living squeeze.

International sanctions provide the broader framework for this crisis. They restrict oil exports, disrupt hard-currency inflows, and raise the cost of trade and finance. According to the IMF, Iran’s economic growth in recent years has generally remained modest, often between two and three percent, with a clear slowdown expected to be below one percent this year. Such weak growth is insufficient to absorb new entrants into the labor market or to offset losses from years of stagnation, and it simultaneously limits the state’s ability to expand social spending without resorting to “inflationary financing” – that is, printing money instead of securing sustainable funding.

The labor market reflects the depth of the predicament as well. While official statistics sometimes show overall unemployment rates in single digits, the data confirm that youth unemployment is far higher. Official reports indicate that unemployment among those aged 16-24 hovers around 19 percent, which helps explain the strong presence of young people in protests. In addition, labor actions over delayed wage payments or the erosion of real wages recur, adding a persistent layer of economic tension.

Energy subsidy reform has historically been one of the most sensitive files. During the November 2019 protests, gasoline price hikes – reported by Reuters to have reached about 200 percent for some categories – triggered a broad eruption of anger. Since then, any adjustment to fuel prices or rationing systems has been met with deep suspicion, because transportation costs quickly feed into food and service prices.

It's true that some protest waves, such as those that erupted in 2022, were sparked by clear social and political issues. But the economy has always been the factor that widened their scope. High inflation, currency collapse, and weak job prospects make large segments of society feel that the cost of staying silent is higher than the cost of protesting.

In sum, what Iran is experiencing isn’t a passing crisis but the outcome of a strained economic model: a weak currency, chronic inflation, limited growth, and suffocating sanctions.

Without addressing these roots – through genuine monetary stability, transparent reforms, and better employment opportunities – protests will remain likely to recur, because the economic drivers that fuel them are still firmly in place.