Iran’s inflation crisis is no longer a temporary phenomenon but has become a chronic and structural condition. Contrary to official narratives, this crisis is not merely the result of war or reduced supply of goods, but the direct outcome of economic and political mechanisms that have taken shape over many years. It is a structure in which unproductive and rent-seeking costs are continuously imposed on society.
Structural Roots of Iran’s Inflation Crisis
In the past, even under unstable conditions, there was a possibility of relatively returning to lower inflation levels. But now, this possibility has almost disappeared. The reason for this change lies in the accumulation of deep economic imbalances.
One of the most important factors is the uncontrolled expansion of spending orders within the power structure. In this framework, economic resources are allocated not based on productivity, but according to the interests of groups close to power. This process has caused public expenditures to rise continuously without any growth in the economy’s productive capacity.
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Under such conditions, the gap between supply and demand expands artificially. The economy lacks the capacity to produce sufficient goods and services, yet demand is increased through liquidity injections and populist policies. The result of this situation is nothing other than the intensification of Iran’s inflation crisis.
Contrary to official claims, historical evidence shows that war alone is not the determining factor behind inflation. The experiences of various countries, from post-World War Europe to contemporary economies, demonstrate that severe inflation has mainly been caused by unstable fiscal policies. Even within Iran itself, there have been periods without war that experienced extremely high inflation.
Rent-Seeking Economy and the Reproduction of Inequality
One of the main features of Iran’s inflation crisis is its connection to the rent-seeking structure of the economy. In this structure, resources are placed in the hands of specific networks instead of being distributed fairly. These networks benefit from exclusive privileges and are effectively shielded from inflationary pressures.
In contrast, the costs of inflation fall disproportionately on low-income groups. Rising prices of essential goods, declining purchasing power, and economic instability have all caused class divisions to increase at an unprecedented level. This is the very process that can be described as the transfer of wealth from the lower classes to the upper classes.
Policies such as distributing electronic coupons or increasing nominal wages not only fail to solve the problem, but in many cases contribute to worsening Iran’s inflation crisis. This is because such measures, without productive backing, merely increase liquidity and place greater pressure on prices.
On the other hand, the expansion of parallel and unaccountable institutions has imposed a heavy financial burden on the economy. These institutions consume a significant share of resources without playing any role in increasing production. Such a structure effectively makes any form of economic balance impossible.
Social and Political Consequences of Inflation
Iran’s inflation crisis is not merely an economic issue, but one with profound social and political consequences. The continuous decline in purchasing power has eroded public trust. People who see their dining tables shrinking day by day gradually lose confidence in the future.
This situation has laid the groundwork for widespread social unrest. The experience of recent years has shown that rising prices have been one of the main factors behind protests. When daily life is disrupted, dissatisfaction becomes a natural reaction.
Moreover, chronic inflation also damages the production structure. Price instability deprives economic actors of the ability to plan and reduces investment. As a result, the economy enters a vicious cycle in which inflation and recession reinforce one another simultaneously.
Iran’s inflation crisis cannot be explained solely by external factors. This crisis is the direct product of a structure in which economic decisions are made in service of political and factional interests. As long as this structure remains unchanged, any effort to control inflation will be doomed to failure.
The reality is that Iran’s economy is facing a fundamental imbalance: limited resources but endless expenditures. This imbalance is not a temporary error, but the result of a flawed decision-making system — a system that, instead of accountability, is focused on reproducing and preserving itself.
