Official figures put Iran’s annual inflation rate at around 34 percent. Unofficial estimates are higher. Prices are soaring. The currency is in free fall: 72,000 tomans buys one US dollar. The exchange rate impacts nearly all goods and services but its psychological effects defy metrics.
For over five years, Iranians have been enduring severe economic pressure. In 2019, inflation jumped from 10% to over 50%, with food prices soaring over 85%. Millions of people have been thrust below the poverty line—almost one in three, according to government officials.
The story of Mahmoud, whose full name is being withheld for his safety, mirrors that of untold numbers of hard-working but frustrated Iranians whose ambitions have been dashed by the moribund economy.
In 2019, Mahmoud worked in the marketing department of an Iranian app store. He earned 7 million tomans a month ($540 back then), almost half of which he paid as rent for a modest apartment in Tehran. He tried to save a little every month.
That summer, Donald Trump’s “maximum pressure” campaign began to bite. Life was evidently costing more. Many Iranians scrambled to convert their meager savings into more stable assets—gold, land, a small apartment on the outskirts of larger cities, a vehicle even.
Mahmoud had 35 million tomans in the bank. He could buy 2,700 dollars. But then his employer offered to match his savings with a loan. He now had enough to purchase a domestically assembled foreign car or a small apartment outside Tehran. He felt he had to ask around and make an informed decision. That 70 million tomans was all he had.
“I never thought an apartment I had viewed and could almost afford would cost almost three times as much a few weeks later,” Mahmoud recalls. The hesitation had proven costly.
Mahmoud had flashbacks of a similar blow six years prior. During yet another inflationary spike in 2013, Mahmoud’s father sold his home to buy a larger one. By the time the deal was closed, the money he had received could not buy the property he had just sold, let alone a better one.
“That was a big chunk of what dad had gathered in a lifetime. Gone, vanished in a month,” Mahmoud recalls with pain. “I never thought it would happen to me. I was sure I could move fast because I wasn’t selling a house. I had cash.”
He was indeed fast. Just not fast enough. The tiny apartment he could just about afford was now firmly out of reach. And this was not even in Tehran. It was more than 10 miles outside the capital—in a monstrous assembly of shoddy blocks built by the government.
The Mehr Housing Project was intended to provide affordable housing for low-income families. But it became yet another money-making machine for well-placed speculators who purchased them in bulk and rented them to the very people the project was meant to serve.
Mahmoud, priced out of a property he would have sneered at a few years prior, decided to invest his fast-dwindling savings in stocks. The company he worked for offered shares at a discounted price. It was aiming to go public the following year, promising good returns.
Five years later, the company is still not listed.
“My investment has grown but not much,” Mahmoud laments. “Had I bought a car instead, it would be double what my shares are worth today. And I’m reluctant to sell it now, fearing the company going public the minute I cash out.”
Mahmoud has had to move three times in the past five years, each time to a less pleasant neighbourhood. He earns four times what he earned in 2019. But the dollar, a rough indicator of cost of living in Iran, is more than five times what it was then. He feels---and he is, in real terms---considerably poorer.
"My rent was half my salary then. Now it's two-thirds," Mahmoud says, his voice rising and shaking. "We earn in tomans and spend in dollars. A decent apartment in a decent neighborhood in Tehran costs around $300,000 dollars. That's comparable to prices in the US. It's just that our wages are not even a tenth of theirs."
Inflation in Iran shows no sign of abating. Low productivity, mismanagement, and long-lasting US-led sanctions have created chronic inflation that makes the vast majority of Iranians poorer by the year, if not month.
“You know the so-called five stages of grief, right? Denial, anger, bargaining, depression, and acceptance,” Mahmoud says with a bitter smile. “Well, most people I know are somewhere between four and five. And they all earn well above average.”
