The cost of for essential goods and services in Iran have risen by at least 40% over the past four to five months, the Iranian Labour News Agency (ILNA) said in a report, trapping Iranians in a worsening cost of living crisis.
The surge driven by inflation and the removal of government price controls has left families struggling to afford housing, food and utilities under President Masoud Pezeshkian’s administration.
A report published by the ILNA news agency, titled "From electricity to eggs: Everything has become more expensive" described the situation as akin to a "price liberalization bomb that has exploded across all sectors of the economy."
The report referred to sharp increases in electricity and energy bills, meat and eggs, housing, and even luxury goods such as gold and cars. This wave of inflation, ILNA said, has left no corner of the economy untouched.
Iran’s Statistical Center recently reported that urban rental prices rose by approximately 42% in the 12 months leading up to November 2024, compared to the same period the previous year. November alone saw rents climb 3% month-on-month and a whole 40% compared to November 2023.
"Workers across the country can no longer afford to manage their lives, start families, have children, or secure shelter," labor activist Hossein Habibi was cited as saying in an interview with ILNA.
"The crisis has penetrated their very core, and inflation has overwhelmed them."
The price increases extend far beyond housing. Electricity bills, a critical concern as winter approaches, have jumped significantly. At the same time, staple foods such as meat and eggs have become increasingly unaffordable for ordinary Iranians.
Faramarz Tofighi, another labor activist, confirmed that everyday living costs have risen by at least 40% since the Pezeshkian administration took office.
"Price liberalization is advancing at a frightening pace," Tofighi said, pointing to economic policies inherited from the previous government that he said are exacerbating inflation. "From the government and parliament’s statements, it appears that economic officials have raised their hands in surrender. They are openly telling the people that the situation is dire and nothing can be done," he added.
Tofighi emphasized the severity of the current crisis, saying, "This level of inflation is unprecedented in the entire history of Iran." He described the situation as a "collapse of working families into the black hole of livelihood crises."
Government concedes economic missteps
Acknowledging the escalating challenges, President Pezeshkian delivered an assessment in a speech on November 22.
"We have significant imbalances in water, electricity, gas, and the environment—some of which are on the brink of disaster," he said.
Successive governments in the Islamic Republic have repeatedly struggled to address inflation and rising costs. Price-control policies, often implemented as quick fixes, have proven ineffective over the years and incapable of stemming the tide of economic instability.
The human cost of inflation
As inflation tears through Iran’s economy, families are bearing the brunt of the crisis.
The skyrocketing cost of basic necessities has forced many to cut back on essential expenditures, including food and healthcare. The inability to secure affordable housing is driving some into overcrowded or substandard accommodations, compounding the sense of despair.
Labor activists like Habibi and Tofighi warn that the government’s apparent inability to address inflation is eroding public confidence. The rising cost of living, coupled with stagnant wages and dwindling job opportunities, is pushing working-class Iranians to the brink of poverty.
Iran’s inflation crisis, long exacerbated by international sanctions and economic mismanagement, shows no signs of abating. With the cost of living rising sharply across sectors, the Pezeshkian administration now faces mounting pressure to find solutions.
Mohammad Bagher Ghalibaf’s remarks came during a review of the Energy Commission's report on seasonal power outages and fuel shortages for Iran's thermal power plants on Tuesday.
"Energy is one of the country’s significant opportunities but look at the current situation. This summer, we faced over 15,000 megawatts of consumption imbalance," Ghalibaf said, highlighting industrial production losses of 1.5% during the same period, according to the Parliament’s Research Center.
"This is detrimental to both producers and the government, as the government cannot collect taxes from their profits."
Iran’s natural gas production has slowed significantly, with a production growth rate in the past three years reaching just a third of the previous decade’s pace. Much of this slowdown stems from the aging South Pars gas field, which accounts for 75% of the country’s output but is experiencing natural declines. International sanctions have compounded the issue, preventing the acquisition of advanced production platforms.
During the winter of 2023, Ghalibaf noted, the country faced a 250-million-cubic-meter daily deficit in the gas sector, even with industry shutdowns and pressure drops.
This shortage has resulted in widespread power outages and industrial declines. Iran’s steel production, for instance, fell by 45% in the summer, while the petrochemical sector, heavily reliant on natural gas, has been operating at only 70% capacity.
Ghalibaf attributed part of the crisis to inefficiencies within the ministries of oil and energy, saying that their lack of coordination has exacerbated the problem.
“There is a conflict of interest between these two ministries. Both have grown so large that their coordination is no longer manageable by senior officials,” he said. He urged the government and parliament to collaborate with experts to resolve these institutional issues and address organized fuel smuggling, which siphons off 25 to 30 million liters of refined products daily.
The energy shortages have had dire consequences for Iranian citizens. Widespread blackouts in residential areas have disrupted daily life, sparked public anger, and curtailed commercial activity. With 70% of the country’s energy consumption dependent on natural gas, no viable alternative exists to bridge the gap. Planned gas price increases, while potentially boosting revenue, are unlikely to significantly curb consumption given the low domestic gas prices.
Ghalibaf also touched on the international repercussions of Iran’s energy crisis. “There was a time when we could use oil as leverage against enemy threats,” he added, lamenting the loss of this strategic tool due to declining production and logistical issues.
With inflation exceeding 40% for five years, a halved national currency, and over 30 million citizens below the poverty line, the energy crisis adds yet another layer of strain to Iran’s already fragile economy.