Inflation hits 66% as Tehran vows to withstand pressure and continue diplomatic efforts

By Sadiq Abdulfatah

Iran is facing growing economic pressure as the war with the United States and Israel combines with tougher US sanctions, with Iranian leaders acknowledging the impact on trade, inflation and living costs.

The Iranian government said on Saturday that easing the economic pressure caused by the war and sanctions was a major priority. Its plans include controlling inflation, managing prices, creating jobs, supporting local production and reducing dependence on the US dollar.

Iranian President Masoud Pezeshkian said the country’s imports and exports had fallen by nearly 35% because of US sanctions and what he described as a naval blockade of Iranian ports.

The economic pressure has also been reflected in rising prices. Annual inflation in Iran reached 66% last month, according to the report.

Supreme Leader Ayatollah Mojtaba Khamenei called on the government to address the economic difficulties facing the population, including inflation, unemployment and problems affecting prices and the supply of goods and services.

“There is the need to seriously address the chain of economic and livelihood challenges, such as inflation, unemployment, management of prices and the market for goods and services,” Khamenei said in a written statement.

Despite the economic challenges, Tehran has shown no sign of backing down. Iranian authorities have said they will continue to resist US pressure while keeping diplomatic efforts open and maintaining what they describe as control over the Strait of Hormuz.

Pezeshkian also called for the revival of an interim memorandum of understanding signed by Iran and the US in June. He said the agreement could help resolve disputes and restore some benefits for Iran.

Under the June understanding, Washington had allowed Iranian oil sales and offered measures including relief from some sanctions and the release of frozen Iranian assets. Pezeshkian said Iran had sold about 90 million barrels of oil during the period covered by the agreement.

However, the arrangement later broke down following disagreements between the two sides, including over the status of the Strait of Hormuz.

Meanwhile, the United States has continued expanding its financial pressure on Iran, warning countries against maintaining business ties with Tehran or facing possible secondary sanctions.

Washington recently imposed sanctions on Egypt’s Banque Misr over its dealings with Iran and proposed restrictions affecting the bank’s UAE branch and US dollar transactions.

Banque Misr said it was reviewing the US Treasury notice and that its UAE branch continued providing banking services.

The US Treasury has also announced sanctions against a Hong Kong-based entity and an individual linked to Iran’s Bank Melli.

The sanctions campaign has raised concerns about the wider impact on Iran’s trading partners and the global economy, particularly if major countries such as China and India were targeted.

Alongside the economic pressure, diplomatic efforts to end the conflict have continued.

Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani visited Tehran on Thursday and discussed the need to restore open shipping through the Strait of Hormuz, which is a major route for global energy supplies.

Iranian Foreign Minister Abbas Araqchi described the talks with the Qatari prime minister as “creative”.

Iran said on Saturday that diplomacy and defence would remain central to its response, describing the two as complementary approaches to protecting the country’s national interests, security and territorial integrity.

Qatar and Pakistan had previously helped broker the June memorandum between Iran and the United States.

Before the war, the Strait of Hormuz carried about 20% of the world’s oil and liquefied natural gas supplies. The waterway has remained a major point of tension during the conflict.

US military commanders say American forces have cleared sea mines from the strait that they say were laid months earlier by Iran’s Islamic Revolutionary Guard Corps.

US President Donald Trump has repeatedly said the waterway is open. However, the Revolutionary Guards’ navy rejected the claim, saying the strait remains closed to ships without Iranian permission.

The developments leave Iran facing a combination of economic hardship, tougher US sanctions and pressure over the strategic waterway, while Tehran says it intends to pursue both diplomacy and defence as it responds to the conflict.

Source: Reuters