The United States on Monday accused Iran of extreme economic mismanagement as biting sanctions wreak havoc on the Iranian economy, and the European Union agreed a new slew of moves against the regime.

State Department spokeswoman Victoria Nuland said Washington had seen reports that on "everything from shoes and clothing to foreign-imported wallpaper, the Iranian regime is now trying to restrict in terms of the way their citizens use their foreign exchange."

"This just speaks to the extreme economic mismanagement, the extreme political mismanagement of the Iranian regime and the fact that the Iranian people are now feeling the full effects of the bad decisions that their government has made," Nuland said.

European Union foreign ministers on Monday agreed a slew of tough new financial and trade sanctions against Iran aimed at forcing a breakthrough in stalled talks on Tehran's contested nuclear program.

"This is a sign of our resolve," said British Foreign Secretary William Hague. "That we will step up the pressure, we will intensify the pressure and we will continue to do so over the coming months unless negotiations succeed."

After long denying the impact of Western economic sanctions, Iranian leaders have changed their rhetoric and now regularly condemn the Western-imposed "economic war" against Iran.

They acknowledge that the economy is suffering, in particular due to the cut in oil exports and production, the main source of the country's revenue.

"These sanctions are designed to continue to pressure the regime to make another choice," Nuland said.

"From our perspective, the onus remains on the regime that the door is open, the table is set, they have just to make better choices if they truly care about their people."

Western powers accuse Tehran of seeking to develop a nuclear bomb, charges which Iranian leaders deny, saying their nuclear energy program is purely for civilian purposes.