Protests Erupt in Tehran and Western Iran Amid Economic Turmoil

Economic Strain Sparks Protests

Sporadic protests have been reported across Iran, particularly in the capital, Tehran, as well as other cities such as Kazerun, Isfahan, and Shiraz. The protests began on December 28, when shopkeepers organised a strike in response to mounting economic concerns, notably the rapid depreciation of Iran's rial and rising inflation. However, by the first week of January 2026, these protests had evolved into broader demonstrations, with many calling for political reforms and criticising the government for its handling of the economy.

Local media reports indicate that protests in Tehran have been relatively small-scale, with groups of 50 to 200 individuals gathering in various districts such as Tehran Pars, Ekbatan, and Sattarkhan. Despite their limited scope, demonstrators voiced their discontent with chants such as “death to the dictator.” While clashes have been reported, the unrest has been described by the semi-official Fars news agency as mainly involving symbolic acts of protest like stone-throwing and setting fire to rubbish bins.

Violence Intensifies in Western Iran

In stark contrast to the relatively contained protests in Tehran, unrest in the western regions of Iran, particularly in Malekshahi, has taken a more violent turn. The small county, home to a significant Kurdish population, has seen clashes between protesters and security forces, with one member of the security forces reported dead. According to Fars news agency, rioters attempted to storm a police station, and two assailants were killed in the confrontation. The violence underscores the growing intensity of protests in areas outside the capital, where local grievances may be compounded by ethnic and regional tensions.

Videos of protests in cities like Isfahan and Shiraz have continued to flood social media, despite limited coverage from state-run outlets. These reports have highlighted the challenges facing the government, as protest movements appear to be gaining traction in various parts of the country.

Khamenei's Response to Unrest

On January 3, 2026, Iran's Supreme Leader Ayatollah Ali Khamenei addressed the growing protests, calling for dialogue with the demonstrators but also asserting that those engaging in violent acts should be dealt with harshly. His comments reflect the delicate balancing act the government faces in addressing the economic grievances of the population while preventing the protests from escalating into broader anti-government movements.

In his speech, Khamenei acknowledged the economic hardships facing the country but emphasised that “rioters must be put in their place.” His remarks suggest that while the government is open to addressing public concerns, it will not tolerate unrest that threatens stability. Analysts believe Khamenei's words signal the regime's intent to suppress violent protests while managing the underlying dissatisfaction through policy changes.

Inflation and Currency Depreciation Fueling Discontent

The protests come at a time of severe economic strain in Iran. The rial has fallen to new lows against the US dollar, with reports indicating it has crossed the 1.4 million mark per dollar. This currency depreciation, which has worsened since the US withdrew from the 2015 nuclear deal, has contributed to inflation, driving up the cost of living for ordinary Iranians. According to official statistics, food prices rose by 72% in December 2025 compared to the previous year, while healthcare costs saw a 50% increase. Many Iranians fear the country is on the brink of hyperinflation, which would make daily necessities even more unaffordable.

The resignation of Iran's Central Bank head, Mohammad Reza Farzin, in response to the economic crisis further highlights the government's struggles to stabilise the economy. Farzin had taken office in 2022 when the rial was valued at around 430,000 to the dollar. The rapid depreciation of the currency since then has exacerbated the economic pressure on Iranian households.

Regional and International Implications

While protests have been sparked by economic issues, they also reflect broader dissatisfaction with the government's handling of the country's political and social challenges. The economic mismanagement and worsening living conditions have left many Iranians feeling disillusioned, with some calling for more significant political changes. However, the Iranian regime is unlikely to entertain significant political reforms without considerable pressure, given its history of suppressing opposition movements.

Internationally, the protests highlight the challenges facing Iran's government as it navigates a volatile regional and economic landscape. The country is still grappling with the fallout from the 2018 US withdrawal from the nuclear deal, which led to the reimposition of harsh sanctions. These sanctions have devastated the Iranian economy, particularly in sectors like oil, which has historically been a cornerstone of its financial stability.

In addition, the growing instability within Iran poses a potential risk to broader Middle East security, especially in the context of its tense relations with neighbouring countries such as Israel and Saudi Arabia. The Iranian leadership's focus on internal stability is likely to influence its foreign policy, as it seeks to avoid external pressures that could further undermine its position.

Context:

Iran's current protests are reminiscent of those that swept the country in late 2019 when rising fuel prices sparked widespread unrest. However, this time, the protests appear to have been catalysed by a broader range of economic issues, including the collapse of the currency and the rising cost of living. While economic protests have often been met with force, there are indications that the government may need to adopt a more conciliatory approach to prevent further escalation.

The government's handling of the protests will likely depend on the political will of the leadership, which has historically favoured maintaining tight control over dissent while attempting to address underlying grievances through reform. However, whether this approach will be enough to satisfy an increasingly frustrated public remains uncertain, particularly if the economic situation continues to worsen.