Iran’s economy in charts: Hyperinflation and depreciating rial

The war in the Middle East is plunging Iran’s already fragile economy into freefall.

Tehran’s primary war tactic has been economic damage. Iranian strikes have targeted the energy infrastructure of its neighbors and instituted a blockade on the vital Strait of Hormuz, through which around 20% of the world’s oil and gas was shipped before the war, precipitating the worst energy shock in decades.

But its own economic position is precarious.

Before the conflict, Iran was already under pressure due to sanctions. Inflation exceeded 50% in 2025. Its currency, the rial, had lost 60% of its value in the months after the 12-day war against the U.S. last July. 

Food inflation soared to 64% by October last year and had accelerated to 105% by February, with bread and cereals up 140%, and oils and fats up 219% in the year through March 2026.

Iranian banks started distributing a 10-million rial bill last month, the largest denomination note in its history, as authorities sought to contain inflation and meet demands for hard cash.

In its World Economic Outlook, the International Monetary Fund estimated that the Iranian economy will shrink by 6.1% in 2026, with 68.9% inflation. Its currency has fallen to around 1.32 million rial per U.S. dollar.

There are challenges to analyzing how Iran’s economy is faring in the war. The country has not published GDP data since 2024, and the widespread internet blackout has made domestic statistics (widely seen as unreliable) inaccessible outside the country.

The effective closure of the Strait of Hormuz and the U.S.’ subsequent blockade have cut off most of Iran’s international trade, including oil exports. 

More than 90% of its annual trade passes through the strait. Renewed strains amid the U.S. blockade could cut off 70% of Iran’s export revenues, Jason Tuvey, deputy chief emerging markets economist at Oxford Economics, wrote in an April 15 note.

The war has also triggered a collapse in domestic demand and imports, Tuvey said, adding that while official data are scarce, trade figures for March from trading partners showed exports to Iran have plummeted.

The Trump administration has also dangled the threat of fresh sanctions on Chinese banks facilitating transactions tied to Iran.

The combined pressure of the blockade and the threat of sanctions on Chinese banks supporting Iranian oil trade may be dealing a more severe blow to Iran’s economy than…