Iran’s point-to-point inflation accelerated to 62.2% in Bahman 1404 (Jan. 21–Feb. 19, 2026), the highest level in 34 months, according to the Central Bank of Iran. Monthly inflation reached 8.4% in the same period, marking a 44-month high and signaling intensifying price pressures across the economy.
The data, released by the central bank ahead of the Statistical Center of Iran—contrary to recent practice—show consumer prices rising more than 62% compared with Bahman 1403 (Jan. 21–Feb. 19, 2025). The simultaneous surge in monthly and annual indicators has raised concerns that Iran may soon record its highest inflation since the post–World War II era if the trend persists into Esfand 1404 (Feb. 20–Mar. 20, 2026).
Analysts attribute the latest jump primarily to the mid-Dey 1404 (Dec. 22, 2025–Jan. 20, 2026) adjustment of the preferential exchange rate, implemented to reform subsidy allocation and reduce rent-seeking linked to multiple exchange rates.
Given Iran’s dependence on imported intermediate and essential goods, exchange-rate changes quickly pass through to consumer prices by raising import costs and production expenses.
Part of the currency adjustment’s impact appeared in Dey, while the remainder materialized in Bahman’s 8.4% monthly inflation.
Although price increases were spread over two months—preventing a new record for monthly inflation—the cumulative effect has pushed the annual rate toward new highs. The previous monthly inflation peak was recorded in Khordad 1401 (May 22–Jun. 21, 2022), when a sharp exchange-rate shift triggered an immediate price shock.
From a technical standpoint, economists estimate that if monthly inflation in Esfand exceeds roughly 3.2%, the point-to-point rate could surpass the previous peak registered in Farvardin 1402 (Mar. 21–Apr. 20, 2023). Seasonal factors—including pre-Nowruz demand, year-end financial settlements and potential currency volatility—traditionally place upward pressure on prices in Esfand.
The welfare implications are significant. A more than 60% annual rise in prices implies a steep erosion of purchasing power unless nominal incomes increase proportionally.
Wage adjustments typically lag inflation, widening the gap between household income and expenditure and disproportionately affecting lower-income groups.
Consumption patterns are also shifting toward essential goods, dampening demand in discretionary sectors and adding recessionary pressure in parts of the services and manufacturing economy.
Producers face growing uncertainty as input costs and wages rise, complicating long-term planning and weakening investment incentives.
While authorities have paired exchange-rate reform with targeted subsidy measures such as electronic vouchers, economists note that without stabilizing inflation expectations, such policies may have limited impact.
Looking ahead, the trajectory of inflation will depend on exchange-rate management, liquidity growth and policy credibility.
Even with tighter fiscal discipline and banking-sector adjustments, persistent external shocks and financial restrictions continue to shape expectations and exchange-rate dynamics.
If monthly price growth moderates, a new inflation record may be avoided; if not, Iran could enter a new phase of elevated and entrenched inflation in early 1405 (starting Mar. 21, 2026).
