By Pishtaz | 2026-01-16

Across Iran a deepening economic crisis and surging public anger have combined into widespread unrest, challenging the Iranian regime's hold on power.

The regime has introduced some administrative changes and promised economic reforms while quietly continuing to fund proxy groups abroad, largely out of public view.

Yet tangible improvements remain absent, and daily economic conditions for ordinary Iranians continue to deteriorate.

Soaring inflation, currency collapse, and declining living standards have eroded public trust and intensified frustration across urban and rural communities.

As protests persist and security forces respond with force, the gap between government promises and lived realities continues to widen.

Economic collapse

At the heart of the unrest is the collapse of the Iranian Rial, which has inflicted the greatest hardship on the public.

When Central Bank Governor Mohammad Reza Farzin took office in late 2022, the Rial traded at roughly 430,000 Rials per US dollar.

By late 2025, it had plunged to about 1.42 million Rials per dollar, a dramatic depreciation that obliterated savings and exacerbated cost of living pressures.

According to state statistics, the inflation rate in December 2025 reached 42.2% year on year, rising from previous months.

During the same period, basic food prices surged 72%, while health and medical item costs increased by about 50% compared with the prior year.

Rapid currency depreciation and energy price increases have intensified inflation, squeezing household budgets and fueling growing fears of an approaching hyperinflation scenario.

In a bid to calm public anger, the Iranian government has undertaken some symbolic administrative changes.

Most notably, the central bank governor was forced to resign and replaced, a symbolic move intended to signal accountability and a shift in monetary policy.

The regime has also instructed dialogue with protest representatives and pitched reforms to the monetary and banking system

Yet these gestures have thus far failed to quell nationwide protests, which have spread beyond economic grievances to include broader calls for political change.

Security forces have killed dozens of demonstrators in several cities, employing tear gas, water cannons, and gunfire against marchers -- especially in Tehran’s Grand Bazaar.

Quiet commitment to regional proxies

While Iran publicly touts reform efforts at home, Tehran has continued its financial support for proxy groups abroad, even as its economy crumbles.

According to the US Department of the Treasury, Tehran has funneled more than $1 billion to Hizbullah during the first ten months of 2025.

This dedication to external militant networks comes against the backdrop of sanctions, economic contraction, and public hardship at home.

Critics argue that the Iranian leadership prioritizes geopolitical influence and its "axis of resistance" strategy over the well-being of ordinary Iranians.

Tehran’s network of proxies across Lebanon, Iraq, Yemen, and beyond has long supported its regional policy, often using resources meant for the Iranian people.