Iranian families struggle to afford the basics as US ratchets up economic warfare

KUALA LUMPUR, 22 AUGUST 2026 —

Iranian Families Face Rising Costs as US Escalates Economic Pressure

Nearly six months into the conflict with the United States and Israel, Iran’s economy is buckling under sanctions and a naval blockade that has crippled oil exports—the country’s lifeblood. The strain is visible in Tehran’s markets, where families cut back on essentials like fruit, meat, and even leisure activities to survive.

Ahmad Karimi, a 52-year-old taxi driver and father of two, works 15-hour days to make ends meet. “We’ve given up on many things,” he told the Associated Press. “We’re cutting out protein, leisure, even weekends. Every decision to say no to our children weighs heavily on us.”

Economic Collapse Amid Sanctions and Blockade

Since the war began on Feb. 28, Iran has retaliated by targeting oil-rich neighbors and disrupting shipping in the Strait of Hormuz, a critical chokepoint for global oil trade. The Trump administration has responded with escalating sanctions, vowing to impose the “most crushing economic operation ever taken against any country.”

Iran’s economy, already weakened by a decade of sanctions, is forecast to shrink by over 5% this year, with inflation expected to exceed 70%, according to the International Monetary Fund. While subsidized gasoline remains cheap, supplies are dwindling, and officials warn of potential price hikes—a move that has sparked protests in the past.

A mother of two in northern Iran recently shared her struggle on social media after spending 89 million rials ($65) on milk, eggs, and toilet paper—no meat. “Buying necessities is our priority now,” she said, requesting anonymity for fear of retribution. “The emotional toll is exhausting. Every time we have to say no to our children, it breaks us.”

Regional and Global Ripples

The economic squeeze has extended beyond Iran’s borders. The United Arab Emirates, a long-time facilitator of Iran’s sanctions circumvention, announced this week it was suspending all trade with Tehran. The move follows a call between UAE leader Sheikh Mohammed bin Zayed Al Nahyan and U.S. President Donald Trump.

Meanwhile, Iran’s Revolutionary Guard, the country’s most powerful military faction, has resisted calls for concessions, insisting Iran can endure the economic pain longer than its adversaries. Supreme Leader Ayatollah Mojtaba Khamenei recently appointed a former Guard commander to lead Iran’s Supreme National Security Council, signaling a hardline stance.

Stalled Negotiations and Political Tensions

Iran’s elected government, led by President Masoud Pezeshkian, has signaled a preference for a negotiated end to the war. “Our priority is people’s livelihoods,” Pezeshkian told reporters last week. “We are doing everything we can to address the economic crisis.”

However, the Revolutionary Guard’s influence has grown stronger after surviving early U.S. and Israeli airstrikes that killed top Iranian leaders. The Guard is pushing for control over the Strait of Hormuz and financial reparations, complicating any potential deal.

Economists warn that Iran’s resilience may not translate into political concessions. “Iran’s resistance capacity avoids collapse but prevents the economic pain from forcing the political changes the U.S. expects,” said Hadi Kahalzadeh, an expert on Iran’s economy at Brandeis University.

Malaysia and Southeast Asia Watch Closely

For Malaysia and neighboring economies, the escalating tensions in the Strait of Hormuz pose risks to trade and energy security. The strait, a shipping route for Malaysian LNG and palm oil exports, has seen increased disruptions since the war began.

“Any prolonged blockade could disrupt supply chains and drive up global energy prices,” said a Malaysian trade official, requesting anonymity. “We are monitoring the situation closely.”

Regional analysts note that Malaysia’s trade with Iran, though limited, could face indirect impacts if sanctions tighten further. “The UAE’s decision to halt trade with Iran may prompt other countries to reassess their dealings with Tehran,” said a Kuala Lumpur-based economist.

The Human Cost

Beyond economic indicators, the war’s toll is visible in Iranian households. Families ration food, skip medical treatments, and forgo education expenses to survive. A Tehran-based economist, Hassan Golmoradi, noted that while frustration is growing, fear of repression has stifled protests.

“Despite the hardships, Iranians have shown remarkable patience,” Golmoradi said. “They do not believe violent protests will improve their situation.”

Professor Mohammad Farzanegan of the University of Marburg echoed this sentiment, emphasizing that Iran’s leadership has framed dissent as treason, punishable by death. “People suffer, but they do not see protests as a viable path forward,” he said.

Looking Ahead

With negotiations stalled and both sides dug in, the economic crisis in Iran shows no signs of abating. The IMF’s projections suggest further hardship, while U.S. threats of “crushing” sanctions could deepen the isolation of Iran’s economy.

For now, Iranian families like Karimi’s continue to adapt, cutting back on every possible expense. “We survive by making do with less,” he said. “But how long can we keep this up?”

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