US Iran War Costs Reach $38bn as Munitions Deplete and Inflation Rises

The United States has spent approximately $38 billion on its military campaign against Iran, according to a Congressional Budget Office (CBO) report released this week. The nonpartisan analysis warns that if the conflict persists, costs will escalate by an estimated $3 billion every month, further pressuring the nation’s fiscal health and economy.

Released on Tuesday, the report highlights two critical consequences of the six-month war: depleting US munitions reserves and rising inflation driven by Iran’s blockade of the Strait of Hormuz, a vital artery for global oil exports. The shortage of defensive systems poses significant security risks should a new conflict arise elsewhere.

The findings intensify scrutiny of the war, which began on February 28 when the US joined Israel in strikes against Iran. President Donald Trump initially predicted the operation would conclude within weeks, but it has now entered its seventh month. The prolonged engagement has destabilized global energy markets, pushing oil prices to $105 per barrel and increasing the likelihood of interest rate hikes.

Stockpiles and Costs

The $38 billion figure aligns closely with the $37.5 billion cited by Defense Secretary Pete Hegseth during a Senate hearing in July. However, the CBO estimate excludes costs associated with recent strikes on vessels in the Strait of Hormuz, Iranian attacks on US bases, and borrowing expenses, which could add tens of billions more. Munitions consumption accounts for the bulk of the spending, with $25 billion worth of weapons expended. Restoring these stockpiles could take up to five years.

The report projects that inflation may rise by 0.5 percentage points in the first quarter of 2027. This fiscal strain occurs as US national debt surpassed a record $40 trillion last month.

Pentagon Admits Supply Chain Bottlenecks

In a separate assessment released on Monday, the Pentagon’s Office of the Inspector General provided the first official acknowledgment that US munition stocks are running low. The watchdog’s report, covering the period from February 28 to June 30, estimated costs at $33 billion, including $22 billion for spent ammunition.

This contradicts repeated assertions from the Trump administration that ammunition reserves remain robust. While White House officials continue to dispute CBO findings regarding shortages, the Pentagon admitted to supply chain bottlenecks, particularly for defensive systems. The report also documented $184 million in damage to US facilities in the Gulf and the loss of at least 18 military personnel, including the destruction of dozens of aircraft such as MQ-9 Reaper drones.

Political Backlash and Economic Impact

Opposition to the war is gaining momentum. On Tuesday, seven House Republicans joined all Democrats in voting for a resolution to end the conflict, marking the third such congressional vote. The measure is unlikely to pass the Republican-led Senate or survive a presidential veto.

Public support for the military action has dropped to 31 percent, according to a late August Reuters/Ipsos poll, down from 37 percent in March. Meanwhile, everyday Americans are feeling the economic pinch. The average price of diesel hit a record $6.27 per gallon on Tuesday. Consumers have spent an additional $100 billion on fuel in the first six months of the war, averaging $763 per household across an estimated 131 million US homes.

Higher energy costs are also inflating food prices due to disruptions in the supply chain. Democrats have capitalized on these cost-of-living concerns, recently securing victories in progressive Senate primaries in Michigan and Minnesota.

Midterm Implications

The war’s economic fallout is becoming a central issue in the lead-up to the November midterm elections. Polls indicate Democrats currently lead Republicans 44 percent to 37 percent in congressional voting preference. Trump has promised a $5,000 payment to every adult if Republicans retain control of Congress and suggested the war could end after the elections. Despite the political headwinds, Trump dismissed concerns about the conflict’s impact on his standing, stating he does not believe in regret.