Iran War Drives Up US Inflation, Interest Rates Expected to Rise
The Congressional Budget Office (CBO) has released a report indicating that the war against Iran is driving up inflation for Americans. The report found that more than one-third of the increase in inflation this year can be attributed to the ongoing conflict.
The CBO specifically blames the war for over 40% of inflation during the second quarter of 2026 and an estimated half a percentage point of higher inflation during the first quarter of 2027. This is likely to lead to rising interest rates, making borrowing more costly.
The average price of a gallon of gasoline in the US has increased by 45% since the beginning of the war, hitting $4.32 as of Tuesday. Diesel prices have also risen, reaching a record $6.26, an increase of 66%. The CBO report attributes this to fewer oil and natural gas shipments through the Strait of Hormuz and the Red Sea.