Iran’s Street: Economic Pain, Not Ideology, Drives Public Sentiment as War Escalates

One week into the United States and Israel’s campaign against Iran, the divergence between government rhetoric and public anxiety has become a chasm measured in rials, not missiles.

Life in once-bustling Tehran is grimmer now, though residents for the most part have food, water and electricity, according to multiple reports from inside the country. But the Iranian rial’s value has plummeted dramatically, falling from approximately 42,000 to over 1.1 million against the US dollar since January 2026, rendering purchasing power almost non-existent for imported goods. Inflation has soared, with the rate at 52.6% in December, according to official data.

The Weight of Daily Survival

"Enough is enough," one young man inside Iran told NBC News, his identity protected due to fear of reprisal. The man said the Iranian people have the will to fight but "we need to be armed" and "there needs to be air support, because they will shoot us."

Yet others in Iran have told NBC News that they welcome the toppling of Khamenei but fear a bloody, protracted conflict that further devastates their beloved home and leaves fewer alive to experience a free Iran. This split reflects the impossible calculus facing ordinary Iranians: endure the status quo or risk everything in uncertain upheaval.

The monthly minimum wage, which at the start of this year stood at 135 million rials—about $180—has now fallen to roughly $100, according to analysis by Middle East Forum. Maintaining a middle-class standard of living next year would require at least 600 million rials per month (about $550)—meaning the minimum wage would need to quadruple, a scenario labour associations describe as impossible.

Currency as Barometer of Fear

The rial’s collapse tells a story beyond economics. Currently a "barometer of political fear," the rial has no floor as long as the combination of external Economic Warfare led by the US and internal institutional rot remains, according to Mohammad Reza Farzanegan, a professor of Middle East economics quoted by The National.

"We are seeing 'economic self-defence' from the bazaar: merchants are closing shops because in an environment where the currency loses value by the hour, rational pricing becomes impossible. Selling inventory today often means not having enough capital to restock tomorrow," Farzanegan explained.

As sanctions tighten, public fear grows, prompting households to move savings into dollars, gold, silver, diamonds, and digital currencies — assets perceived as more reliable than the rapidly weakening rial, according to National Iranian American Council. This flight to safety becomes self-reinforcing, accelerating the very decline households seek to hedge against.

The Food Inflation Trap

For Iran’s poorest, the crisis is existential. 42% of total expenditures for the poorest decile go toward food, compared to 21% for the wealthiest decile. When food prices rise faster than other goods, as is happening now, the effective inflation rate for poor households becomes significantly higher than the national average, according to statistics analyzed by researchers.

In 2025, food price inflation in Iran was above 70%, according to House of Commons Library. Meat has reportedly become a luxury food item, whereas 7 million Iranians have gone hungry.

The government’s response—small cash allowances worth about $26 (4 million rials) per month for a family of four—is viewed as inadequate and potentially inflammatory. For a family of four, it is offering 40 million rial monthly credit, worth approximately $26 at the current market exchange rate of 1.5 million rials to the dollar, breaking down to about 22 US cents per person daily.

Regional Spillover and Market Implications

The rising death toll includes about 950 Iranians, according to the Iranian Red Crescent; six U.S. military members; and dozens more in Israel, the United Arab Emirates, Kuwait, Bahrain, Oman, Iraq and Lebanon, as reported by NBC News.

These Iranian strikes are more extensive than seen in past conflicts. After the killing of IRGC-Qods (overseas) leader Qasem Soleimani by the US in 2020, Iran attacked one US military base in Iraq. Similarly, following the Israel-US strikes in June 2025, Iranian action was limited to a strike on a US base in Qatar, according to UK parliamentary analysis.

In the recent escalation linked to US-Israeli strikes on Iran, Iranian missiles or projectiles hit Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, Kuwait, and Jordan, according to Atlantic Council. None of these states launched attacks against Iran from their territory. Their involvement in the broader conflict was neither offensive nor direct.

For energy markets, the calculus is straightforward. Iran controls the Strait of Hormuz, a vital shipping route. About 20 million barrels of oil and oil products pass through every day, according to the U.S. Energy Information Administration cited by NPR. Despite sanctions, Iran managed to export around 1.9 million barrels per day as of December.

Government Rhetoric vs. Public Reality

Khamenei, the Iranian supreme leader who was a key player in the Islamic Revolution of 1979, is gone, but the Islamic Revolutionary Guard Corps he empowered remains in control, alongside an interim leadership council. The IRGC’s economic entrenchment means regime change does not guarantee policy change.

Iranians are on edge about what may come next. Many are desperate for a democracy, yet there are some who still support the current regime and want it to remain in place. This fracturing reflects not ideological conviction but exhaustion and fear of alternatives.

The attacks come when the Iranian regime is arguably at its weakest point for some years: There were extensive protests in Iran in early 2026, motivated by a weakened economy as well as struggling infrastructure, illustrating the regime’s weakened legitimacy within the country. The protests were put down with extensive use of force, according to UK parliamentary research.

What to Watch

Currency trajectory: The rial’s freefall shows no sign of stabilizing. The rial’s fall beyond 1.5 million per dollar on January 27, 2026, was a striking headline-but not a turning point, according to Caspian Post. Further depreciation will compound food inflation and social unrest.

Oil market response: Any prolonged closure of the Strait of Hormuz would trigger supply shocks across Asia and Europe. China buys around 90% of Iran’s oil exports of roughly 1.7 million barrels a day, giving Beijing both exposure and leverage.

IRGC cohesion: The Revolutionary Guards control an estimated 40% of Iran’s economy. Whether they fracture or consolidate around hardliners will determine the regime’s trajectory and any negotiating position.

Proxy network activation: Hezbollah launched missiles and drones against northern Israel on March 2, dragging Lebanon into the conflict on Iran’s side. Yemen’s Houthis announced that they would resume their attacks on Red Sea shipping and American military installations. Escalation across multiple fronts remains the primary regional risk.

The gap between Tehran’s defiance and civilian exhaustion is widening. As the war escalates, so does the domestic cost for Iranians in terms of economic hardship and political repression.