The US war on Iran is worsening inflation and straining the country’s munitions stockpiles, a report from the nonpartisan Congressional Budget Office (CBO) has found. The report, released on Tuesday, found that the cost of the six-month war has reached $38bn and is expected to rise by $3bn per month. The war is projected to increase inflation by 0.5 percentage points in the first three months of 2027.
The conflict has caused disruptions to the global energy market and contributed to rising prices as voters express concern over the cost of living ahead of the November midterm elections. The CBO estimate is in line with those offered by Secretary of Defense Pete Hegseth during congressional testimony in July, during which he placed the cost of the war at $37.5bn. Hegseth urged Congress to approve a dramatic increase in the US military budget, already the largest in the world by a significant margin.
The Pentagon chief also slammed critics of the war during the heated testimony, denying that the conflict, which Trump initially estimated would last several weeks, was turning into a “quagmire”. Reports have also found that the war has exhausted US supplies of key munitions, stretching the military’s ability to fulfil commitments in other parts of the world. The CBO report estimated that it could take up to five years to replenish US munitions stockpiles.
The report does not include borrowing costs associated with the war or Iranian attacks that have hammered US military installations in the Middle East. The Trump administration has angrily denied reports on flagging munitions stockpiles and continued to argue that the war is worth the cost. The CBO read-out comes one day after a report on the war compiled by inspectors general at the Pentagon, a government watchdog, detailed munitions shortfalls and production bottlenecks, along with the loss of dozens of US aircraft during the war.
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