A report released on September 15, 2026, by the Congressional Budget Office (CBO) indicates that the ongoing war with Iran is contributing significantly to rising inflation in the United States. The CBO attributes more than one-third of the inflation increase this year to the conflict, projecting that inflation will likely continue to rise into the first quarter of 2027. The report specifically states that the war accounted for over 40% of inflation during the second quarter of 2026 and is expected to add an estimated half a percentage point to inflation in the first quarter of 2027. As a result, interest rates are anticipated to increase, leading to higher borrowing costs for Americans.
The report notes that the average rate on a 30-year mortgage has risen from under 6% before the war to 7.22% as of September 15, 2026, according to Mortgage News Daily. The CBO identifies a reduction in oil and natural gas shipments through the Strait of Hormuz and the Red Sea as a primary factor driving inflation. The average price of gasoline in the U.S. has increased by 45% since the war began, reaching $4.32 per gallon, while diesel prices have surged 66% to a record $6.26.
Additionally, the CBO report highlights a shortfall of U.S. munitions and supply chain bottlenecks as a consequence of the war, estimating that it will take five years for the Pentagon to replenish munitions expended during the conflict, which has cost approximately $38 billion as of August 1, 2026. This estimate does not include costs associated with repairing damage to U.S. military bases in the Middle East.
White House spokeswoman Anna Kelly stated that President Trump took decisive action to address the threat posed by Iran, asserting that the U.S. military has sufficient munitions to meet strategic goals. However, the CBO noted that it could not estimate the cost of damage to U.S. military facilities due to a lack of cooperation from the Defense Department in providing necessary information.
Senator Elizabeth Warren, D-Mass., called for an end to the war, describing it as detrimental to both the economy and military readiness. The report estimates that replacing missile defense interceptors alone will cost $13.1 billion, with total munitions replacement costs reaching $21.7 billion. Maintaining the current level of military engagement is projected to require $2 billion to $3 billion per month, with higher costs anticipated if the conflict escalates.