The numbers Iran's government points to as signs of resilience: — rising sales, growing bank deposits, steady industrial output— are being driven less by confidence than by fear, and the gap between the headline economy and the lived one is where the real story is.
Iran’s wartime economy is still moving, but much of that movement is defensive rather than healthy. Sales, deposits, and transaction values have risen in some areas even as households cut consumption and export-linked firms struggle to pay workers.
At a recent Chamber of Commerce commission meeting in Tehran, several managing directors also questioned whether sales growth reflected genuine demand. Customers, they said, were placing precautionary orders against uncertainty. A truck seller described an unusually large order from Khalij Fars Co. at a 30% premium after initially refusing to sell; the deal was priced at roughly 270,000 tomans to the dollar, far above prevailing rates. Such purchases can lift headline sales without signaling confidence. In wartime inflation, buyers across the supply chain—not just consumers—order early when they expect shortages, price increases, or policy disruption.
Inflation Behind the Numbers
Iran entered the conflict with the United States vulnerable. The rial hit a record low of 1.8 million to the dollar in April, and the central bank reported year-on-year inflation of 65.8% for the Iranian month from March 20 to April 20. The World Bank has described the country as operating under sanctions even when a brief oil-sector recovery supported growth. By June, inflation had reached 88.6%.
Shaparak, the national payment network, reported transaction values rising 105% year-on-year while transaction counts grew only 4%. The gap points to inflation-driven spending rather than stronger real consumption. Unit sales at Ofogh Kourosh, one of Iran’s largest retail chains, slipped below their long-term trend, while total rial deposits across 13 listed banks reached 8,600 trillion tomans in Khordad 1405 up 68.2% from a year earlier. Long-term deposits gained share as short-term deposits declined.
The figures do not establish a single causal link, but they point to caution: prices are rising faster than purchases, cash is being parked for longer, and retail volumes are weakening. For households, this means compression. Average inflation reached triple digits in more than 15 provinces, according to the Statistical Center of Iran; food inflation exceeded 160% in many areas, and healthcare costs rose by more than 150%. Families frequently narrow spending to food, healthcare, and housing; protein and fruit become less routine, while non-essential purchases are delayed, downsized, or abandoned.
Capacity Without Conversion
Industry remains uneven. Of 460 monthly sales reports filed by listed companies in Khordad 1405, the five strongest industries were wood products, securities-related businesses, pharmaceuticals, printing and publishing, and detergents. Mobarakeh Steel recorded more than 81 trillion tomans in first-quarter sales, roughly in line with the previous year despite damage during the conflict. Parts of industry remain active, but headline sales can mislead: a company can hold revenue steady while households cut back elsewhere.
Iran is not poor in industrial capacity; it is poor at converting industrial capacity into wealth. It has factories, engineers, energy, and a large domestic market, but wealth requires production that is profitable, competitive, exportable, and connected to global markets. Currency instability, administrative pricing, sanctions, energy disruption, weak financial intermediation, and state-dominated management keep much of industry below potential, limiting the conversion of productivity into income.
From Exports to Wages
The damage extends through export-linked supply chains. People familiar with conditions in steel and petrochemicals describe layoffs, wage pressure, and growing labor unrest as companies tied to damaged sites or export markets face interrupted orders, delayed payments, and weaker cash flow. Major steel facilities have suffered severe disruption, and key petrochemical infrastructure has been shut down, affecting contractors, suppliers, and local labor markets.
One person familiar with operations at Sarv Iranian Iron Ore, who requested anonymity because of concerns about retaliation, said its pellet exports had stopped, cutting off a crucial revenue source. Workers have received only part of their wages for more than three months and have protested over arrears, the source said. The company did not respond to a request for comment, and the account of the person who talked about the company could not be independently verified. It nonetheless shows how trade disruption can become a cash-flow crisis and then a direct shock to household incomes.
Several business owners had prepared for a disruption lasting three to four months, relying on inventories, credit lines, and informal workarounds. As the conflict has stretched on, those buffers have run down. The issue is no longer simply surviving a temporary shock, but financing production, retaining workers, and keeping supply lines open if uncertainty becomes normal.
Oil, Currency, and Households
Trade and sanctions deepen the distortion. Iran remains dependent on external channels for revenue, industrial inputs, shipping, and payments; that dependence is most acute in energy. Oil exports shape public finances, the exchange rate, and prices. When oil revenue is constrained or delayed, pressure falls back on the currency and spreads through import costs and domestic pricing.
Alireza Heydari, vice chairman of the Union of Veteran Laborers, described the strain: “The economy is like a cancer patient that has developed metastasis, and all of its organs and tissues are involved.” He identified the exchange rate as a main channel of inflation. Over the past two years, currency depreciation has raised the cost of imported consumer goods, intermediate inputs, and capital equipment, pushing up final prices.
The strain is reaching beyond formal employment. A director of a community charity who is being identified by her surname Daneshvar said her organization is encountering growing unemployment and deeper distress among vulnerable people, as well as rising concern about suicidal thoughts among some people it supports. Her account is not a national measure of mental-health trends, but it shows how lost income, debt, and prolonged uncertainty can widen an economic shock into a social crisis.
Labor economist Ebrahim Jafarian said: “The situation is especially difficult in southern Iran. The industrial and business sectors there have been heavily impacted by the war. Many people have lost their income with almost no alternative options even in the black or informal market.”
He added that “the four-month internet blackout severely damaged many small businesses and independent women entrepreneurs who relied on social media platforms like Instagram to sell their products and run their businesses.”
“Workers are adapting mainly through informal employment and reduced working hours,” Jafarian pointed out. “That may soften the immediate blow, but it usually comes with lower real income, weaker job security, and more psychological strain. In effect, the labor market keeps people moving, but on worse terms.”
The contradiction at the center of Iran's economy is now difficult to miss. Some sectors still post respectable sales, and certain exporters may benefit if oil waivers hold. Yet none of it has translated into stronger household purchasing power. The conflict has not frozen Iran's economy in place; it has changed its behavior. Businesses stock up earlier, buyers order out of fear, and banks attract money that might otherwise have been spent.
Iran has learned to function under pressure; the question is how long adaptation can continue before it becomes decline.
