Iran’s Economic Collapse Pushes Businesses Toward Bankruptcy as Consumers Struggle to Survive

Skyrocketing inflation, collapsing purchasing power, and growing uncertainty are devastating markets, forcing layoffs and closures across Iran

As Iran’s economic crisis deepens, soaring prices, collapsing purchasing power, and growing uncertainty about the future are pushing businesses across the country into severe recession, layoffs, and possible closure.

In recent weeks, owners of service-sector businesses and small shops dependent on daily consumer spending have warned that people are cutting back even on ordinary purchases and basic services. Many markets, they say, have effectively run out of customers.

A broad range of businesses — from restaurants and coffeehouses to clothing stores, grocery shops, and tourism-related enterprises — are now facing major declines in sales.

Business owners say sharp increases in the price of goods, combined with the continued erosion of household income, have forced citizens not only to eliminate nonessential expenses but also to reduce ordinary daily purchases.

Several shopkeepers described the current period as one of the most difficult economic phases in recent years, emphasizing that fear and uncertainty about the future have made consumers more cautious than ever. Many families are trying to preserve what little money they have for emergencies and basic survival.

Inflation and War Fallout Crush Small Businesses

The rising cost of raw materials and the economic fallout from ongoing regional tensions and war fears have hit producers particularly hard.

According to local reports, tobacco prices have climbed to five million tomans per kilogram, while charcoal now costs around 400,000 tomans per kilogram. Many small production workshops have reportedly gone bankrupt due to soaring costs, weak consumer demand, and financial instability, forcing owners to shut down operations.

Restaurant owners say many dining establishments are now effectively empty, with sales in numerous restaurants and fast-food outlets collapsing to near zero.

Earlier, Ahmad Meydari, Iran’s Minister of Cooperatives, Labour, and Social Welfare, announced that approximately 230,000 workers who lost their jobs since the start of the recent conflict had registered for unemployment insurance.

Meanwhile, Hojatollah Mirzaei, former director of Iran’s national pension funds, warned on May 21 that another 4.5 million people could fall below the poverty line during the current year.

The severity of inflation and fears of even higher prices have changed consumer behavior dramatically. Many families reportedly buy groceries only for one or two days at a time because they can no longer afford monthly shopping.

According to citizen reports, a basic shopping basket containing one carton of milk, a box of dates, dishwashing liquid, three 100-gram butter packs, a small yogurt, oatmeal, rice noodles, two packs of potato chips, 500 grams of coffee, and 250 grams of walnuts now costs around 6.4 million tomans.

Shoppers reportedly walk through stores unable to afford even the most basic items. Some vendors say that out of every 200 customers, perhaps only one person can afford to buy a small amount of chicken — enough for a single meal for a three-person family.

Restaurants, Tourism, and Retail Sectors in Crisis

The collapse in consumer spending has severely affected Iran’s food industry.

With the average price of a sandwich reaching roughly 500,000 tomans and a pizza climbing to nearly 1.2 million tomans, many restaurant and fast-food owners say they are being forced to lay off employees and consider shutting down their businesses entirely.

In mid-May, the Iranian Labor News Agency (ILNA) reported that annual inflation for food products, based on official data, ranged between 117 percent and 165 percent.

Clothing retailers have also reported historic declines in market activity over the past four months.

The owner of a shoe manufacturing workshop in Tabriz said that since the January protests, the market has been “half-shutdown,” with both production and sales collapsing.

He added that people are struggling to meet basic living expenses and that markets have remained stagnant since the 12-day conflict, forcing many families to survive on savings.

Tourism Industry Near Collapse

The economic downturn has extended far beyond food and retail markets.

Large-scale layoffs and bankruptcies are spreading through industrial and service sectors connected to tourism and hospitality.

Reports indicate that around 70 percent of accommodation units in major tourist cities such as Mashhad are empty, while many hotels have already reduced staff numbers.

In Kish, local sources describe the tourism and hotel industry as being in a state of collapse.

Many workers who have been laid off or pushed out of their industries say they have turned to unstable temporary jobs, including driving for ride-hailing platforms such as Snapp, in order to survive.

Numerous reports published in recent months have documented accelerating inflation, collapsing purchasing power, and surging prices for essential goods across Iran.

Citizens say the cost of everyday life has risen dramatically, turning even the simplest daily purchases into major financial challenges.

The growing pressure is now directly threatening independent businesses, small enterprises, and self-employed workers across the country, further deepening Iran’s economic and social crisis.