Iran's inflation hits World War II levels, deepening economic pain

DUBAI, United Arab Emirates (AP) — Year-on-year inflation in Iran reached a level in May unseen since World War II, underlining the economic pain average Iranians face as the Islamic Republic worries about the war with Israel and the United States restarting.

A report Monday by Iran's Central Bank represents the first official acknowledgment of what Iranians shopping, paying for a taxi or visiting a medical clinic already know: The rial currency is battered by the war and uncertainty around it resuming.

Meanwhile, longtime problems of economic mismanagement and government corruption also appear to be dragging down Iran's oil-backed economy as it remains under a U.S. naval blockade.

Economic pressure in the past has sparked nationwide protests, something Iran's theocracy has been trying to avoid since a crackdown on demonstrators in January killed over 7,000 people, according to activists' estimates.

But even as hard-liners hold gun-handling workshops and organize marriages under the shadow of a ballistic missile to bolster spirits, experts note that new demonstrations could emerge if people find themselves priced out of feeding their families.

“I have no doubt that if Trump leaves (Iran without a formal peace deal) ... most probably, we will see something like January by the end of summer because of the economic and social situations," analyst Mohsen Jalilvand said in a video published by Iran's Fararu news website.

Iran's Central Bank said the consumer price index, which measures a basket of goods and services, reached 77.2% in May compared to the year before. It added the rate is 8.5% higher than in April. Inflation in daily and general needs — like medicine, taxi fares, tobacco and communication fees — rose 113.8% from the year before.

Iran only saw worse inflation in 1942 during World War II, sparked by the British and Soviets invading the country and taking over its railway, disrupting food supplies. The lack of food, worsened by a poor harvest, sparked hyperinflation and a famine. Hunger and a typhus outbreak killed many.

A private economic think tank in Iran, the Bamdad Institute of Economic Studies, described the current figures as “an unprecedented rate since World War II.” Iran's Central Bank did not acknowledge the significance of the figures.

Airstrikes this year have greatly damaged Iranian businesses and its oil industry, Meanwhile, the U.S. blockade has been targeting Iranian crude oil shipments trying to reach the international market, a key source of hard revenue. Tax revenues have been depressed by businesses struggling even after the fighting paused.

The rial, which traded at 32,000 to $1 in 2015, now trades at over 1.7 million to $1.

“We will definitely have higher prices," Iranian President Masoud Pezeshkian warned in May. "We are fighting and we must accept this hardship.”

In 2017 into 2018, rising food prices sparked demonstrations that killed over 20 people and saw hundreds arrested. An increase in government-subsidized gasoline prices caused protests that saw over 300 people reportedly killed.

Then came the protests over the rial at the start of this year, the most intense demonstrations to shake the Islamic Republic since its 1979 revolution and chaotic years that followed.

Tehran-based economist Saeed Leilaz, speaking to The Associated Press, warned that annual inflation in Iran could reach 80%.

"Iran’s society cannot tolerate above 25%” annual inflation, he said.

Karimi reported from Tehran, Iran.

People walk at Tehran's historic Grand Bazaar, Iran, Monday, June 1, 2026. (AP Photo/Vahid Salemi)

Pedestrians and vehicles cross an intersection around Tehran's historic Grand Bazaar, Iran, Monday, June 1, 2026. (AP Photo/Vahid Salemi)

Men sit at the gate of a mosque at Tehran's historic Grand Bazaar, Iran, Monday, June 1, 2026. (AP Photo/Vahid Salemi)

A woman walks at Tehran's historic Grand Bazaar, Iran, Monday, June 1, 2026. (AP Photo/Vahid Salemi)

People carry packages at Tehran's historic Grand Bazaar, Iran, Monday, June 1, 2026. (AP Photo/Vahid Salemi)

BRUSSELS (AP) — The European Union has moved forward with a vast overhaul of its migration policy, aiming to ramp up deportations and ink controversial deals to build detention centers abroad, in what rights groups compare to the Trump administration's aggressive immigration policies.

“The new regulation will speed up the return process and increase returns of persons who have no legal right to stay in the EU,” said Nicholas Ioannides, deputy migration minister for Cyprus, which holds the rotating presidency of the 27-nation bloc.

The deal was struck between the EU's three main institutions — the European Commission, the European Council and European Parliament — during a so-called “trilogue” Monday evening.

“Europe cannot afford another period of standstill,” said Dutch lawmaker Malik Azmani, who shepherded the regulation through the European Parliament.

“There is an urgent need for an effective return policy with higher return rates," he said, adding that only 28% of rejected asylum seekers return to their country of origin, with the majority staying put in the EU. “This situation is deeply concerning. It undermines public confidence in our common migration policies.”

Critics compared the regulation to the immigration policies of the Trump administration, which has struck a series of secretive agreements with nations around the world to deport thousands of people to countries that are not their own. The United Kingdom also planned to deport migrants to Rwanda, but the plan was bogged down in legal red tape and was dropped when a new government came to power in July 2024.

“Across the Atlantic, we see the violence and fear created by ICE’s brutal immigration enforcement," said Silvia Carter, spokesperson for the Brussels-based Platform for International Cooperation on Undocumented Migrants, referring to U.S. Immigration and Customs Enforcement. “Europe should be learning from the harms of that model, not building its own version of it.”

Law enforcement officers across the bloc no longer need warrants from judges to raid private residences or public institutions like hospitals, she said. “The regulation is going to create a draconian detention and deportation machine."

The provisional agreement will now head to the EU lawmakers and governments, where approval will likely be swift.

“These new rules will ensure swifter, simpler, and more effective procedures across the European Union for returning non-EU nationals who have no right to stay, in full respect of international law and fundamental rights,” said Henna Virkkunen, EU commissioner for technology.

EU member nations will soon be able to set up bilateral deals with countries outside the bloc to build deportation centers. At least five EU nations — Germany, Austria, the Netherlands, Denmark and Greece — are already in talks with third countries, mostly in Africa, to host “return hubs” on the model of Italy's detention deal with Albania.

“We are delivering the member states tools in their hands to make those agreements and arrangements with third countries,” Azmani said.

Mélissa Camara, a lawmaker from the French Green party, said the deal was “a historic setback” for human rights in the bloc.

“The legalization of return hubs outside the European Union, the green light for the detention of minors, home visits inspired by ICE practices: the legal arsenal serving a xenophobic ideology is now complete,” she said.

The EU has continually tightened migration policies after right-wing parties secured the majority of votes in some countries in the 2024 elections to the European Parliament. European Commission President Ursula von der Leyen, from the center-right European People’s Party coalition, has said that the new measures will prevent a repeat of the 2015 crisis caused by Syria’s civil war, when about 1 million people arrived to seek asylum.

Fueled by people fleeing conflict and poverty across Africa and the Middle East, the 2015 refugee crisis and successive years of irregular migration to Europe drove a rightward shift in the bloc's politics not unlike the anti-immigrant sentiment that buoyed a “ red wave ” in the 2024 election in the United States.

After successfully campaigning on tougher migration policies, the winners of that election, the European People’s Party, the largest political group in the EU, began negotiating migration reform with centrist and left parties only to eventually sidestep them by allying instead with the far right, said Carter, the asylum rights activist. “There was quite an unprecedented shift in the European Parliament."

Advocacy groups warned the regulation would cut deep into the protections granted by the EU fundamental charter on human rights and expose people to risks outside the bloc.

“This deal will give governments much broader powers to detain and deport people," said Marta Welander, a spokesperson for the International Rescue Committee, a humanitarian organization. "It looks set to normalize immigration raids, expand the use of detention in prison-like facilities outside EU territory that are essentially legal black holes, and increase the risk of people being deported to countries where they could face persecution, torture or worse.”

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Police conduct a search operation at a makeshift camp of migrants who want to cross the English Channel to Britain near Dunkirk, northern France, Wednesday, May 27, 2026. (AP Photo/Jean-Francois Badias)