Iran’s long-standing economic hardships reached a critical turning point at the end of last year. As the Iranian rial depreciated to a historic low, the prices of imported daily necessities spiraled out of control, making basic goods unaffordable for most families. The protests initially erupted among merchants in Tehran and quickly spread nationwide, with students, workers, and the general public joining in. Their demands shifted from improving living conditions to calling for an end to the theocratic regime led by Supreme Leader Khamenei. The government responded with force, resulting in hundreds of deaths, thousands of injuries, and nearly 10,000 arrests, marking the most severe social unrest since Iran’s founding in 1979.
Rial Depreciation Causes Widespread Price Chaos
Iran heavily relies on imports for food and daily necessities, including wheat, cooking oil, and pharmaceutical raw materials. In 2025, the rial depreciated by about 45% against the US dollar, significantly increasing import costs. Merchants were forced to raise prices across the board, making many basic goods unaffordable for ordinary families.
Meanwhile, five consecutive years of drought have severely damaged agriculture, deepening Iran’s dependence on expensive imported food. The International Monetary Fund (IMF) initially estimated Iran’s inflation rate in 2025 at around 42%, higher than 33% in 2024. Even before prices soared, many people were already struggling; local media in 2022 reported that about half the population was consuming fewer than 2,100 calories daily.
Beyond inflation, public discontent has long simmered over air pollution, power shortages, gas shortages, and mismanagement of natural resources. In December, the government adjusted fuel subsidy policies, raising gasoline prices and further burdening households and businesses.
Local Merchants Lead Protests, Spreading Nationwide
In late December, protests were first initiated by merchants and wholesalers. They took to the streets in Tehran, criticizing the government’s economic management, which had led to business failures and hardship for the people. The protests did not subside quickly but instead expanded gradually.
By January, the wave of protests spread across the country. Students, workers, and middle-class citizens joined in, with demands escalating from controlling prices and improving incomes to opposing theocratic rule under Supreme Leader Khamenei.
Security forces were deployed to suppress the unrest forcefully, resulting in hundreds of deaths and thousands of injuries, making it one of the most serious internal upheavals in Iran’s history.
Why Has the Rial Been Weakening Long-Term?
The rial has been under persistent pressure for years, mainly due to Western sanctions and domestic corruption, which undermine confidence in the economy. In 2025, many citizens converted their savings into foreign currencies, gold, cryptocurrencies, or real estate to hedge against further depreciation, accelerating the rial’s decline.
Falling international oil prices also dealt a double blow to Iran. In 2025, Brent crude oil prices dropped by 18%, to about $60 per barrel; however, the IMF estimates that Iran needs oil prices of $165 per barrel to balance its fiscal budget.
Additionally, Iran’s multiple exchange rate system, where the government subsidizes certain imports at preferential rates, has led to severe corruption. Ordinary citizens generally believe the system favors the elite, deepening social discontent.
Why Are Iranians Growing More Impoverished?
Despite its rich oil resources, Iran is hampered by sanctions that prevent most countries from purchasing its oil legally. Sanctions began after the 1979 Islamic Revolution and the Iran hostage crisis, and intensified in the 2000s over nuclear issues.
Long-term sanctions have driven away foreign investment, hindered technology transfer, and caused domestic industries to decline due to corruption and mismanagement, with aging infrastructure. Agricultural productivity is low, compounded by severe water shortages, limiting output. Most livelihood industries are controlled by state-owned or semi-official entities, including charitable foundations closely linked to power centers, which operate with low transparency and lack market competition.
Oil remains the backbone of Iran’s economy, mostly exported through opaque channels to Chinese refineries, and sold at discounted prices due to sanctions.
Nuclear Deal at the Heart of Sanctions, US-led Tensions
In 2015, Iran signed a nuclear agreement with the US and other countries, leading to a temporary easing of UN sanctions, but economic benefits were limited. In 2018, then-President Trump withdrew from the deal and reimposed comprehensive sanctions.
In April 2025, Iran and the US resumed negotiations aiming for partial sanctions relief but failed to reach an agreement. In June, Israel and the US carried out airstrikes on Iran’s nuclear facilities, severely damaging its nuclear program and affecting the UN nuclear watchdog’s inspection capabilities. By September, the UN restored full sanctions on Iran.
How Is This Protest Different from Past Movements?
Past protests were often triggered by political or social incidents, such as:
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The 2020 accidental shoot-down of a Ukrainian passenger plane,
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The 2022 death of Masha Amini after being detained over hijab disputes.
This time, the trigger was runaway inflation and deteriorating living conditions, affecting all social strata and involving people with diverse political views. However, internal disagreements within the Iranian government emerged over how to respond. President Raisi considered the protests “reasonable” and urged security forces to avoid violence against peaceful demonstrators; Supreme Leader Khamenei emphasized the need to “stop the riots” and adopted a hardline crackdown.
Khamenei’s Forceful Suppression and Foreign Intervention Allegations
Since the ultimate decision-making authority and security operations are controlled by Khamenei, he publicly labeled protesters as saboteurs and accused foreign powers of interference, vowing to suppress the unrest decisively.
As casualties increased, Khamenei accused Israel and the US of inciting chaos and implemented internet shutdowns to block information flow. State media initially broadcast images of protests but later switched to coverage of government rallies, claiming to showcase “national unity.”
Theocratic Rule Erodes Public Support, Future Uncertain
Iran’s theocratic regime has been in power for over forty years, during which the population has endured war, social control, and prolonged economic decline. Unemployment and poverty have driven millions to emigrate, and many have lost faith in the government.
In June 2025, the US and Israel bombed Iran’s nuclear facilities, killing several high-ranking military officials and scientists, posing a major challenge to the regime. Trump repeatedly warned that if the government continued to kill peaceful protesters, the US would intervene again.
However, no cohesive or organized opposition force has emerged, and the government’s brutal repression has weakened protest momentum. The future of Iran’s political landscape remains highly uncertain.
(Will Trump intervene in Iran? Democratic lawmakers warn: Could lead to a repeat of history)
This article, From Economic Sanctions and Currency Collapse to Mass Protests: How Iran’s Economic Crisis Ignited Large-Scale Unrest, first appeared on Chain News ABMedia.
