Is Iran's middle class sliding into poverty?

For Mina, a housewife from Iran, war is no longer measured by airstrikes or military announcements. It is measured by what is no longer on the family table.

"Since the war started last year, we've been getting poorer every day," she tells DW. "Honestly, I don't remember the last time I bought red meat. We've replaced it with chicken, but even that has become a luxury. We don't think about saving anymore. We only think about how to pay the rent and buy food."

The International Monetary Fund predicts Iran's economy will shrink by 5,4 percent this year, while inflation is expected to reach nearly 69 percent. 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 researcher based in Sweden, the war did not create the economic crisis in Iran, but it drastically worsened it.

"Iran entered the conflict with inflation already above 40 percent, a weakened currency, a chronic budget deficit and years of sanctions," he told DW.

"The war acted as an external shock. Damage to infrastructure, disruption of trade, internet shutdowns and rising inflationary expectations accelerated the decline in purchasing power," Alavi explains.

Alavi points to official data showing that annual inflation has reached 66 percent, while year-on-year inflation is approaching 88 percent. Food prices are rising even faster. According to him, bread and cereals have risen by about 140 percent, meat and poultry by 135 percent, dairy products by more than 116 percent, and edible oils by over 200 percent.

For many families, these numbers mean buying less meat, postponing medical treatment, and abandoning any savings plans.

The war has pushed about four million Iranians into poverty.

Economists say households tend to cut back on travel and clothing expenses first. But as inflation continues to rise, restrictions are spreading to food, healthcare and education, putting increasing pressure on middle-income families who were once considered financially secure.

Alavi points out that lower-income households have been hit hardest, but adds that the middle class is also facing the same pressures.

"Many employees and retirees fell below the poverty line for the first time because incomes did not keep up with inflation."

He estimates that since the escalation of the conflict, between 3,5 and 4,5 million Iranians have fallen into poverty, bringing the total number of people living below the poverty line to over 40 million.

Businesspeople pressured by uncertainty

The Iranian private sector is also feeling the pressure.

Morteza, an Iranian trader, says regional trade routes have changed rapidly after transportation through the Strait of Hormuz became significantly more difficult.

"China reacted quickly to fill part of the gap left by suppliers from Dubai," he explains to DW.

"Unlike the Persian Gulf countries, China can also ship goods by rail through Central Asia, thus avoiding many of the risks and delays that accompany maritime transport."

He believes the growing importance of these land routes was one reason the US targeted a railway line near Iran's border with Turkmenistan, although this assessment could not be independently confirmed.

Despite this, Morteza says this change has not brought much benefit to Iranian traders.

"The fall in the value of the riyal and the spike in inflation have prevented the market from growing," he says. "Traders live in constant uncertainty because the exchange rate changes almost daily. Goods that we used to buy and sell at lower prices now have to be purchased at much higher prices, and that's assuming buyers have enough money to buy them at all."

For Morteza, uncertainty became the biggest obstacle.

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

Can the government soften the blow?

Despite higher oil prices on the world market, Alavi says Iran is unlikely to benefit significantly from it, as sanctions, export restrictions and higher transportation costs continue to limit its oil revenues.

He argues that government measures, including subsidies, price controls and foreign exchange market interventions, can alleviate some of the current pressure, but are unlikely to solve the underlying problems.

"Without restoring trust, easing sanctions, and addressing structural problems, these policies remain short-term responses, not lasting solutions."

The price of uncertainty

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

According to him, many companies are postponing investments because they lack confidence in future economic conditions. At the same time, households are becoming more cautious about spending money, as they expect prices to continue to rise and the value of their incomes to fall further.

He points out that restoring confidence among investors, businesses and consumers will likely take much longer than repairing the physical damage caused by the war.

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

Looking ahead, he expects a further decline in living standards if current trends continue.

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

"We don't talk about the future anymore," Mina says. "We just hope we have enough money for next month's rent."