Iran’s inflationary pressures have surged again after a brief period of relative stability earlier this year. The latest figures from the Statistical Center of Iran show that point-to-point inflation reached 48.6% in October, leaving the economy only a short distance from the 50% mark. Monthly inflation rose to 5%, the highest in nearly three and a half years — a level last seen during the policy shift that removed the preferential exchange rate in mid-2022.
The renewed rise in inflation marks a structural change in the economy. The average monthly inflation rate, which stood at 3.3% in the first quarter of the year, climbed to 3.7% between summer and October. Economists believe this acceleration reflects deeper macroeconomic imbalances and growing uncertainty. Over the past four months, inflation has consistently remained above 40%, while the Central Bank’s target of reducing it to 30% by year-end appears increasingly unrealistic.
Based on the current trajectory, annual inflation is expected to remain in the range of 45% to 50% by March 2026 (end of the Iranian calendar year). Should the pace observed in October continue, the year-end point-to-point rate could even exceed 51%. The persistence of high inflation is largely attributed to excess liquidity growth, a widening fiscal deficit and volatility in the exchange rate. Political and external factors — including the 12-day conflict between Iran and Israel and renewed concerns over the reactivation of the “snapback mechanism” — have also contributed to rising inflation expectations.
The burden of inflation has been particularly heavy on low-income households. Food and beverage prices rose by 64.3% year-on-year in October, with a 6.4% increase in just one month. In rural areas, the monthly inflation rate for food items reached 6.8%. Bread and cereals recorded an annual inflation rate of 98%, followed by fruits and nuts at 94% and vegetables and legumes at nearly 78%. For the lower three income deciles, which allocate around half of their earnings to food, such price surges have significantly weakened purchasing power and living standards.
Iran’s inflationary streak has now lasted 62 consecutive months with rates above 30%, an unprecedented episode in the country’s economic history. Persistent inflation of this magnitude places Iran among the world’s most inflation-prone economies. Economists note that while inflation control is theoretically straightforward, its implementation depends on policy coherence and institutional credibility — both of which remain under strain.
Experts warn that without decisive reforms, inflationary expectations will remain deeply entrenched. They recommend a combination of tighter monetary policy to restrain liquidity growth, fiscal discipline to curb budget deficits and gradual removal of price controls that distort markets. Additionally, reducing geopolitical uncertainty through a more predictable foreign policy could help restore confidence and stabilize the exchange market.
The inflation outlook for late 2025 therefore hinges on the government’s willingness to implement credible and coordinated policy actions. Unless these measures are pursued, Iran risks remaining trapped in a cycle of high inflation that undermines both household welfare and long-term economic resilience.
