Is Iran’s middle class being pushed into poverty?

For Mina, a housewife in Iran, the war is no longer measured by airstrikes 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 added. 

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.

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.

Businesses squeezed by uncertainty

The pressure is also being felt by Iran's private sector.

Morteza, 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. "Unlike Gulf countries, China can also ship goods through rail links across Central Asia, avoiding many of the risks and delays associated with maritime transport."

He believes the growing importance of these overland routes was one of the reasons the US targeted a railway line near Iran's border with Turkmenistan, although that assessment could not be independently verified.

Even so, Morteza says the shift has brought little benefit to Iranian traders.

"The collapse of the rial and soaring inflation have prevented the market from growing," he says. "Merchants are living with constant uncertainty because exchange rates change almost every day. Goods that we bought and sold at lower prices now have to be replaced at much higher costs, and that's only if customers still have enough purchasing power to buy them."

For Morteza, uncertainty has become the biggest obstacle.

"With tensions continuing, I honestly don't see a clear future for doing business in Iran."

Can the government soften the blow?

Despite higher global oil prices, Alavi says Iran is unlikely to benefit significantly because sanctions, export restrictions and higher transport costs continue to limit its oil revenues.

He argues that government measures, including subsidies, price controls and intervention in the foreign exchange market may ease some immediate pressure, but are unlikely to address the underlying problems: "Without restoring confidence, reducing sanctions and addressing structural problems, these policies remain short-term responses rather than lasting solutions."

The cost of uncertainty

Alavi says uncertainty itself has become one of the biggest barriers to economic recovery.

According to him, many businesses are delaying investment because they have little confidence in future economic conditions. At the same time, households are becoming increasingly cautious about spending as they expect prices to keep rising and the value of their incomes to fall further.

He says rebuilding confidence among investors, businesses and consumers is likely to take much longer than repairing physical damage caused by the war.

Unless inflation eases, the exchange rate stabilizes and trade conditions improve, Alavi believes many households will remain under financial pressure, even if military tensions subside.

Looking ahead, he expects living standards to deteriorate further if current trends continue.

He says more families are likely to cut spending on protein, healthcare and education, while business closures and unemployment may continue to rise.

"We don't talk about the future anymore," Mina says. "We only hope we can afford next month's rent."

Danyal Babayani is an Iranian journalist, author, and human rights activist who currently works as a reporter for Deutsche Welle.

Disclaimer: This opinion first appeared on DW, and is published by special syndication arrangement.