The US War with Iran Has Already Cost $38 Billion and Will Accelerate Inflation

The US war with Iran has cost the American budget about $38 billion in the first five months. If hostilities continue, monthly expenses could be an additional $2–3 billion, and the consequences of the conflict will further accelerate inflation in the country.

This was reported by Bloomberg with reference to a new assessment by the US Congressional Budget Office (CBO).

According to CBO calculations, about $38 billion is the direct costs of the US Department of Defense since the beginning of the war. This sum includes conducting military operations, munitions use, protection of American bases, and other conflict-related expenses.

With the current level of hostilities maintained, the war will cost the US an additional roughly $2–3 billion every month. This means that the final cost of the conflict may far exceed the current estimate.

The war affects not only government spending. CBO expects that conflict-related disruptions in energy markets will add about 0.5 percentage point to inflation as measured by the personal consumption expenditures price index in the first quarter of 2027.

One of the main reasons for the additional price increases has been problems with energy supplies through the Strait of Hormuz and the Red Sea. Military actions and threats to shipping keep oil and petroleum product prices high, which then filter through to the cost of transportation and other goods and services.

Inflationary pressure in the US has already intensified significantly. According to the Bureau of Labor Statistics, consumer prices rose 0.4% in August compared to July and 3.4% on an annual basis. Gasoline rose 3.9% over the month and accounted for more than a third of the overall monthly increase in consumer prices.

Munitions expenditures remain a separate problem. According to CBO's estimate, the United States may need at least five years to replenish supplies of some interceptor missiles used to protect American troops and bases from Iranian attacks.

These estimates complement a previously published report by the Pentagon Inspector General. According to it, in just the first four months of the war, the US military spent more than $22 billion on munitions, and the intensity of their use led to shortages of certain strategic stocks and exposed limitations in the American defense industry.

Thus, the economic cost of the conflict for the US goes far beyond direct military spending: the war simultaneously increases the burden on the budget, requires years-long restoration of arsenals, and intensifies price pressure domestically.

Based on materials from: Bloomberg, The Wall Street Journal, US Bureau of Labor Statistics