Iran War Costs US Over $38 Billion, Projected Inflation Impact

The Congressional Budget Office has reported that the US Department of Defense spent more than $38 billion on the first five months of the Iran war, through August 1. This estimate aligns with an earlier prediction by Defense Secretary Pete Hegseth, who stated that the war would cost around $37.5 billion.

The nonpartisan Congressional Budget Office also predicts that the war will add half a percent to inflation in the first quarter of 2027. This is largely due to reduced oil and natural gas shipments through the Strait of Hormuz and disruptions to shipping through the Red Sea, driving up energy prices.

According to AAA, regular gas has increased by 47% since the war began in February, reaching an average price of $4.37 per gallon. Diesel has set new daily records for several days, averaging $6.31 per gallon. This added cost of shipping will likely be passed on to consumers.