Iran shifts to a 'survival economy', and in Tehran even food is now bought in installments
The Iranian economy is gradually shifting from crisis management to survival management. Households are cutting consumption, switching to installment purchases and second-hand goods, while the government struggles to maintain basic supplies amid rising inflation.
The Iranian economy continues to function nearly six months into the war, but the picture emerging from Iranian economic media is that of an economy gradually shifting from crisis management to survival management. The government is concentrating resources on food, medicine, energy, and employment, while households are cutting consumption, switching to installment purchases and second-hand products, and in some cases even foregoing food and medicine.
The term 'survival economy' is already common in Iran. In mid-July, the economic newspaper 'Donya-e-Eqtesad' dedicated an article to it, stating that the continuation of the war and sanctions might force Iran to shift to a policy where the priority is 'ensuring the population's livelihood, maintaining existing employment, ensuring access to basic needs, and maintaining a minimum of social welfare.' The newspaper emphasized that in such a situation, long-term growth and development goals are pushed to the back.
Inflation and Purchasing Power
The latest data from the Iranian Statistical Center illustrate the reason, especially given the likelihood that they are still biased downward. Annual inflation reached 66% in July, while inflation compared to July of last year stood at 87.9%. In food, the data is higher. According to official figures, food and beverage prices in July were 128.1% higher than a year earlier. Eight out of ten major food groups recorded triple-digit price increases. Prices of oils and fats surged by about 261% within a year, and alongside them, sharp increases were recorded in meat, dairy products, bread, and fruits.
According to a calculation made by the 'Donya-e-Eqtesad' newspaper, since the beginning of August alone, 74.5% of the minimum wage of a four-person family is already required for food purchases alone. In July of last year, the rate stood at 59%. This means that a family earning the minimum wage is left with only 25.5% of its income for all other needs - housing, transportation, medical care, clothing, education, and leisure. About 8 million insured workers in Iran earn the minimum wage, which currently stands at about 16.6 million tomans per month (up to 26 million tomans with mandatory additions).
Changing Consumer Behavior
Installment buying, which in the past was mainly associated with cars and expensive electrical appliances, has spread this year to daily necessities. Chains and stores offer food packages and basic products in installments of four to eight payments. At the same time, sellers of second-hand products are reporting a 40%-60% increase in demand. Demand for red meat in stores has dropped by about 50% compared to a year earlier, and poultry production has seen a sharp decline, with the number of chicks placed in coops falling from 160 million last April to about 100 million this year.
Government Support and Energy Constraints
One of the main tools the government is using to prevent further deterioration is the 'Kalabarg' program, providing credit for basic products. However, the amount of 1 million tomans (about 5 dollars) per person has not been updated since December 2025, despite significant food price hikes. In the medical sector, officials report a shortage of about a thousand types of medicines, with 43 reaching a level of 'critical shortage,' forcing some patients to stop treatment due to costs.
The shortage of electricity is also forcing the manufacturing sector to change its work routine. Discussions are ongoing about limiting power outages for factories to one day a week to prevent production shutdowns, reflecting the difficulty of reconciling the desire to maintain production with the limitations of the power grid.
Financial Pressure
Despite oil sales exceeding 11 billion dollars in the first four months of the Iranian year, pressure on the state budget is increasing. Economists warn that financing the deficit through loans from the Central Bank will increase the money base and exacerbate inflation. Without the return of oil and foreign currency revenues, the government is effectively forced to 'advance the use of future revenues' or borrow to pay salaries. Experts estimate that if current conditions continue, Iran might experience triple-digit inflation for the first time this year.
