The Congressional Budget Office says the war between the United States and Iran has cost $38 billion through August 1 and is running up roughly $3 billion in new expenses each month. The nonpartisan office found the conflict has drained U.S. munitions stockpiles and is set to push inflation higher heading into 2027.
The Congressional Budget Office says the war between the United States and Iran has cost $38 billion through August 1, with expenses growing by $3 billion a month. The nonpartisan office's report, issued Tuesday, also found the six-month conflict has depleted U.S. munitions stockpiles and pushed energy prices higher.
Munitions replacement drives the bill
Most of the cost comes from the rapid use of munitions, and the CBO estimates it could take five years to rebuild depleted stockpiles. The U.S. had used nearly all of its long-range precision missiles during the war. Separately, the CBO's cost breakdown shows munitions replacement at $21.7 billion, followed by $10.4 billion in flying hours, $2.7 billion in elevated fuel costs, $1.9 billion in equipment losses and $1.5 billion in higher operational tempo.
The shortage extends to missile interceptors: the U.S. has likely burned through 50% to 67% of its critical missile-defense interceptors since June 2025. That gap, the CBO said, could limit the Pentagon's ability to respond to another major conflict, such as potential hostilities involving China and Taiwan.
Pentagon presses for emergency funds
Defense Secretary Pete Hegseth reported similar figures at a Senate hearing on July 21, citing costs of $37.5 billion. At that hearing, he requested nearly $90 billion in emergency funding to rebuild munitions supplies, saying: "Without these funds, we face critical shortfalls." The administration has reportedly begun preparing emergency funding requests of up to $70 billion to cover ongoing operations and restock arsenals.
Inflation is the next front
The CBO expects the war to add 0.5% to inflation in the first quarter of 2027. Core PCE inflation, which excludes food and energy, is projected to climb over the same period. It is expected to rise 0.3 percentage points. Attacks near the Strait of Hormuz, which carried roughly 20% of the world's oil before the war began, have driven the energy-price pressure behind that forecast.
Auditors were shut out
The Department of Defense did not cooperate with congressional financial auditors during the review, the CBO said. The report also excludes costs from recent strikes on commercial vessels in the Strait of Hormuz, attacks on U.S. installations in the region, and war-financing borrowing costs that could add tens of billions of dollars. Eighteen U.S. military service members have died in the conflict so far.
Sources: Investing.com, Crypto Briefing
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