Iran may have a higher tolerance for economic pain—but the pain is excruciating as regime reveals 100% inflation in just days on some items

Iran’s leaders have survived American and Israeli strikes, but the economic collapse that triggered the deadliest protests in decades is now openly acknowledged by the regime itself. First Vice President Mohammad Reza Aref admitted that certain products soared more than 100 percent in less than a week. The central bank reported overall annual inflation at 67 percent in mid-April. Food inflation alone rocketed from 64 percent in October to 105 percent by February, pushing the overall rate to 47.5 percent just before the latest war.

A million Iranians lost their jobs after damage to oil and manufacturing, according to an official in the labor and social affairs ministry. Parliament speaker Mohammad Bagher Ghalibaf called the U.S. naval blockade a “new phase” of war, warning that “the enemy has pinned great hope on economic pressure.” The rial hit a record low of 1.8 million to the dollar this week, after falling 60 percent in the months following last June’s 12-day conflict with Israel and another 8 percent in the first six weeks of renewed fighting.

Tehran responded with the usual mix of rationing and repression. The government urged citizens to cut water, electricity, and gas use; steel firms were told to ration sheets. Prosecutors promised 20-year sentences and flogging for price-gougers and hoarders. A 56-year-old Tehran housewife watched a block of cheese rise 29 percent in one week. Authorities plan a 40 percent hike in cement prices, the very material needed to rebuild what the war destroyed.

The regime has raised wages, handed out cash, and issued coupons for rice, chicken, and cooking oil. These subsidies are draining what little remains in state coffers. An insider close to the establishment told Reuters last month that without new revenue the government will struggle to meet payroll, threatening its grip on power. Another official warned the country “will face a disaster” if sanctions are not lifted, because major industrial plants will take months or years to repair.

Reconstruction is projected to cost $270 billion—nearly 80 percent of Iran’s $341 billion GDP. Even if a peace deal is signed, neighbors like the United Arab Emirates may be unwilling to resume oil facilitation or capital flows. While the bazaars empty, some Iranians have turned to doom-spending. A 28-year-old woman named Melika described packed restaurants in Turkey in late April: “Why should we be hard on ourselves? Let’s at least have a nice meal.”

The contradiction is glaring. A government willing to kill tens of thousands of its own people to stay in power now admits the economic pain is excruciating, yet offers no path out except more repression and more subsidies it cannot afford. The real test will come when the money for salaries finally runs dry.

Original reporting: Fortune.