Markets and relations: how Iran survives attacks and sanctions

The already difficult situation in Iran has noticeably worsened over the past six months. The collapse of the currency and the war with the United States complicated the lives of ordinary citizens, first of all. Now it is much more difficult to purchase high-quality goods, make calculations and plan prices even a few days in advance, traders of the Tehran Grand Bazaar, which started large-scale protests at the end of 2025, told Izvestia. Nevertheless, over the decades of isolation, the country has learned to live in complete autonomy — Iran has developed domestic payments, local production and trade through its neighbors. How the economy functions today and how ordinary Iranians live is in the Izvestia report.

Tehran Markets

Tehran is very diverse. It is often conventionally divided into the secular north and the religious south. In the former, bareheaded girls, expensive cafes, and shopping malls are more common, while in the south, a more traditional lifestyle with religious neighborhoods and authentic commerce is more noticeable. But there are places where the two Teherans are intertwined. And these are bazaars.

A significant part of Iranian retail is still based on traditional trade: in these very bazaars, small district stores, shops and street outlets. Chain stores and hypermarkets occupy only 8.5% of Iran's retail market. For Tehran, this share was estimated to be slightly higher — about 15%, but even there, the bulk of trade remained in more established formats.

Despite the heat, the streets and markets of the Iranian capital are crowded. We went to the Grand Bazaar of Tehran, which is located in the very center. It is located next to the Golestan Palace, one of the main historical complexes of the city. The bazaar itself is not a market in the usual sense, but a whole shopping area under the arches. Its covered corridors, according to various estimates, stretched for 10 km. Inside there are shops, warehouses, caravanserais, mosques, bank branches, currency exchanges and separate rows for fabrics, carpets, gold, spices, clothes and household goods.

— Come in, come in. A tourist? Russia? — the merchant says, trying to lead me by the arm into his shop.

In general, you can measure the mood of the whole country using the Grand Bazaar. At the end of December 2025, it was here, among merchants and shopkeepers, that protests began after a sharp drop in the rial and rising prices. Later, the performances spread to students and other cities. The atmosphere remains tense right now.

— My friends died at the protests in January. It wasn't the United States or Israel that killed them," a 19—year-old boy named Sepehr told us when asked how his life had changed over the past six months.

According to Sepehr, if there used to be problems with employment in the country, now they have become even more noticeable. Nevertheless, he is glad that the fighting has stopped, although he does not believe that it will last for long.

— When there was a war, we left Tehran. It was very hard because my brother was serving, and we were afraid that something would happen to him," he said.

At this time, other merchants gathered around us, becoming interested in our conversation. They listened attentively to the questions, although they did not understand anything. Thanks to Sepehr, we were able to translate some things for a merchant from a nearby store named Hassan.

— It's worse, it just got worse. Money is not worth anything at all," he replied dryly to a question about the situation in the country.

Immediately after that, he added something in Farsi. Sepehr laughed and did not translate, just shaking his head.

Inflation is one of the main problems of the Iranian economy. The official currency is still the rial, but in everyday life prices are more often called in the mists. Formally, one mist is equal to 10 rials, but sellers often omit extra zeros in conversation. Therefore, the price almost always has to be adjusted on your fingers for a long time.

This confusion was the result of years of inflation and devaluation. Last October, parliament approved a reform to remove four zeros from the national currency. The authorities explained this by the need to simplify calculations. But by itself, such a measure does not solve the main problem — the decline in purchasing power.

According to the IMF, in 2026, inflation in Iran may reach 68.9%, and GDP may decrease by 6.1%. The World Bank also points to a decline: GDP, according to its estimates, fell by 2.7% in the 2025/2026 Iranian fiscal year, which ended on March 20.

Merchants are the first to feel the fluctuations in the economy. Inflation forces us to constantly recalculate the cost of purchases, rent, delivery, and other expenses. If the rial falls, the seller is no longer sure whether he will be able to buy a new batch at the same price tomorrow. Therefore, some goods become more expensive in advance, with a reserve for a new round of devaluation.

"It's impossible to understand what will happen in two days"

This was explained more clearly by Sorush, the young owner of the store next to the bazaar. His shop is stylized according to rap culture: clothes, accessories, Persian hip-hop. He immediately invited us to sit down and smoke.

— Everything has become more expensive. Due to inflation, it is impossible to understand what will happen in two days," he said.

Soroush cited the Peugeot car as an example. According to him, the car, which he once bought for tens of millions of rials, is now estimated at hundreds of millions.

Cars are a separate topic of conversation. There are many cars from local manufacturers on the streets of Tehran: Iran Khodro, SAIPA, Pars Khodro. You don't often find the Chinese car industry here, and even less often the European one.

A significant part of the industry has been operating on old foreign platforms for years, primarily French Peugeot and Renault. The sanctions have made it difficult to supply components, upgrade technologies, and attract new partners. As a result, the local car industry sacrificed quality and safety.

The conflict that broke out also hit Iran through gasoline. In the country, domestic trade is based on constant transportation between warehouses, markets and shops. Queues at the gas station or fuel shortages are almost immediately reflected on the price tag.

"We had to wait at least four to five hours to fill the tank," Soroush said, adding that the situation has improved now.

He hopes that Iran will one day be lifted from sanctions and the country will be able to "breathe" again, perhaps for the first time since 1979. The first major wave of US restrictions began after the Islamic Revolution and the seizure of the American embassy in Tehran. Later, the sanctions expanded due to support for armed groups, the missile program, human rights, and the nuclear dossier.

But Iran has adapted to the sanctions by changing its economic structures. His model is based on the domestic market, regional trade, intermediaries, commodity exports and the constant search for workarounds. After disconnecting from the international financial infrastructure, the country has developed its own interbank card network, Shetab. It appeared in the early 2000s and connected banks, ATMs, POS terminals and card transactions within the country. For an ordinary Iranian, this works: you can use a card to pay for groceries, travel, clothes, medicines, and various household purchases.

And many people have terminals, even street vendors, whose goods are laid out on a handkerchief right on the asphalt. While we are carefully sorting through dozens of one million riyal notes, the locals quickly pay with a card and leave the store.

Supply problems in Iran

We noticed a fabric store nearby. There you could buy scarves, shawls and other goods that many Iranian women wear. He's being held by a middle-aged man named Morteza.

— Many of our products come from China and Turkey. Now it has become very difficult with calculations and payments. After the war, many of the goods that we want to buy have become more difficult to find, especially high—quality ones," he said.

He also added an important detail.: Demand in its segment decreased after the 2022 protests related to the death of Mahsa Amini and the slogan "Woman, life, freedom." After that, he said, people began to feel worse about chadors, the black veils worn by many Shiite women.

Iran's main trading partners remain India, China, the UAE, Russia, Turkey and neighboring countries, including Iraq. According to international trade statistics, the Emirates were the largest source of imports for Iran, but after the conflict with the United States and subsequent "retaliation" strikes on the country's territory by Iranian missiles, the situation changed.

As we left the market, the stream of people gradually thinned out as evening approached. From the outside, Iran lives a normal life: there is not even a hint of shortage in stores, and the choice of products, household chemicals and other goods is quite comparable to Moscow supermarkets. There is also no shortage of supply in the bazaar. But behind this external normality lies a deep economic crisis, which forces the country's main trading artery, retailers— to constantly recalculate costs and losses.

Iran has learned to live in isolation. But he has to pay for this stability with a weak rial, inflation, expensive imports, technological lag and constant social tension.