Iran War to Drive US Inflation and Deplete Munition Stockpiles
The Congressional Budget Office (CBO) estimates that the ongoing US war with Iran will contribute to a spike in inflation, particularly in energy costs, during the first quarter of 2027. This prediction is based on an analysis released by the CBO, which suggests that the conflict will add approximately 0.5 percentage points to inflation during this period.
The increase in inflation is attributed to reduced oil and natural gas shipments through the Strait of Hormuz and disruptions to shipping through the Red Sea. The CBO estimates that the war has already cost around $38 billion by August 1, with most of the expenses coming from munitions expenditures.
According to the analysis, replacing the expended munitions will continue to be a significant expense, with costs estimated at $2 billion to $3 billion per month after August 1. The CBO emphasized that it cannot provide a full accounting of the war's cost due to limitations in available data.