Inflation in Iran has been a persistent macroeconomic challenge, strongly linked to monetary growth, fiscal imbalances, and structural economic weaknesses. In macroeconomic theory, long-term inflation is closely correlated with money supply growth. In Iran, where liquidity expansion serves as a key monetary indicator, this relationship is particularly significant. This study examines inflation trends and major inflationary shocks in Iran from 1959 to 2025, highlighting both long-term structural drivers and short-term fluctuations.
Long Term Drivers of Inflation in Iran
Over the decades, expansionary fiscal policies, oil revenue volatility, structural supply-demand imbalances, and continuous liquidity growth have fueled sustained inflation.
Persistent structural weaknesses, including low domestic production and high import dependency, continue to generate inflationary pressures.
Major Inflationary Shocks in Iran’s Economic History
Iran has experienced repeated inflationary shocks triggered by economic, political, and external factors. Key episodes include the mid-1970s oil revenue boom, the early 1980s revolution and war period, the early 1990s price liberalization, the 2012–2013 sanctions and currency depreciation crisis, the 2018 U.S. withdrawal from the nuclear agreement, the 2022 removal of subsidized exchange rates, and the liquidity-driven pressures of 2024. Since 2018, consecutive inflation spikes have placed severe pressure on households and businesses, reinforcing inflation expectations and economic uncertainty.
The findings emphasize that controlling inflation in Iran requires strict monetary discipline, fiscal reform, effective exchange rate management, reduced budget deficits, and greater economic transparency to restore long-term macroeconomic stability.
This study is conducted at Monetary and Banking Research Institute by Teimor Rahmani in 2026.
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