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If you're struggling to get ahead financially this year, you're not alone, and the war with Iran may be at least partially to blame. The U.S. has been at war with Iran for nearly four months now. Though the Trump administration frames the cost of the conflict as being one that Iran should ultimately bear, Americans are feeling the cost of war every day in many ways.
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Climbing inflation
The Consumer Price Index, released on Wednesday, showed that inflation increased 4.2% year-over-year, a three-year high. Inflation increased by 0.5% on a monthly basis, and climbing energy costs were 60% of that monthly increase. Food and grocery prices increased by 0.2% and 0.1%, respectively, which was slower than their 0.5% and 0.7% increase in April. Energy prices were up more than 20%, and gasoline prices were up over 40%.
Higher fuel costs
By disrupting the global fuel supply chain, the war has sent fuel costs skyrocketing. According to Moody's Analytics data, since the war began on February 28, the average American household has paid an additional $447.19 for fuel expenses. Cumulatively, that amounts to nearly $60 billion in extra fuel costs. That extra approximately $450 in fuel costs exceeded the average $384 boost a household received from larger tax returns.
If fuel prices stay at their current levels and the war lasts for a year, the average American household could pay almost $2,000 in extra fuel costs by that one-year mark, according to Mark Zandi, Moody's chief economist.
Higher fuel costs also have a ripple effect, increasing prices for freight, manufacturing, agriculture, electricity, aviation, and more. The war disrupted the global shipping and fertilizer markets, which could have an impact on food costs that we haven't yet seen.
Eroded savings
As prices for essentials like fuel and food increase, Americans' savings are being eroded, and many households are taking on debt. According to government data released in late May, the personal savings rate declined to 2.6% in April, which is a far cry from the 31% it reached in 2020.
Additionally, credit card debt reached $1.25 trillion during the first quarter of 2026, a year-over-year increase of 6%. As households feel the financial squeeze, they appear to be spending through their savings and then turning to credit card debt to make ends meet. For some households, interest on that credit card debt becomes another cost of the war.
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The daily cost of war
The war takes a toll on taxpayers every day, too. The Pentagon shared that the first six days of the war cost America approximately $11.3 billion, averaging $1.88 billion per day.
An analysis in Popular Information estimated that the total cost of the first 60 days of the war totaled $71.8 billion, including $15.8 billion for operations, $41.2 billion for munitions, $11.9 billion in damaged or destroyed military equipment, and $2.9 billion in subsidies for the Israeli military.
Those figures don't include indirect costs such as the broader economic impact, interest on the increased national debt, and expenses like financing health care for veterans.
The uneven burden of war costs
The burden of war costs falls unevenly on the American public. According to economists, inflation functions as a sort of regressive tax; it impacts lower- and middle-income households the hardest, since these households spend a larger portion of their budgets on energy and fuel. Though higher-income households have continued their spending, lower- and middle-income households have fallen behind or even gone into debt as a result of these war costs.
The fuel outlook
The United States is better positioned today than during past oil shocks. The use of fracking allows the United States to produce more oil than it previously could, and the adoption of fuel-efficient vehicles has lowered demand. Even so, the ongoing nature of the war with Iran means the damage and increasing fuel costs compound over time.
Bottom line
The stakes could get even higher if the war drags on. Yale Budget Lab chief economist Michael Pearce stated that if the war continues into 2027, Strait of Hormuz disruptions could prompt oil prices to reach $150 a barrel. That scenario could slow the economy and create even greater supply chain pressures. He also said that earlier projections for U.S. GDP growth have already been revised downward, dropping from 2.8% to 2.1% over the course of the year.
For many Americans, the price of the war is showing up at the pump and the grocery store, and chances are you're feeling the financial pressure in several ways. The war's end, when it does come, should be a welcome relief that may help lower your financial stress.
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