Iran War Drives US Inflation and Costs Tally Tops $38 Billion
The Congressional Budget Office (CBO) has released an analysis predicting that the ongoing war with Iran will lead to a significant spike in US inflation, particularly in the first quarter of 2027. According to the CBO, the conflict is expected to add around 0.5 percentage points to inflation during this period, mainly due to increased energy costs resulting from reduced oil and natural gas shipments through the Strait of Hormuz and disruptions to shipping in the Red Sea.
The estimated cost of the war so far stands at approximately $38 billion through August 1, with most of it attributed to munitions expenditures. The CBO notes that replacing expended munitions has been the largest single component of costs incurred by the Department of Defense (DoD) during the conflict, amounting to around $21.7 billion.
The office also estimates that the war will continue to cost the US between $2 and $3 billion per month beyond August 1, with higher expenses expected during periods of escalated fighting. However, the CBO has declined to provide a comprehensive accounting of the war's costs due to limitations in available data.