Iran war has cost US military $38 bn: Congressional Budget Office

The war with Iran cost the US military around $38 billion as of August 1, the nonpartisan Congressional Budget Office said Tuesday, with billions more potentially added to the price tag each month the conflict wears on.

"As of August 1, 2026, the armed conflict with Iran has cost (the Department of Defense) approximately $38 billion," said the CBO in a report, referring to the war that started after US-Israeli strikes targeting Iran from late February.

It added that depending on the intensity of violence, costs per month could range between $2-$3 billion or more if the conflict continued.

These expenses "could be higher still if the violence escalated further," CBO added.

The figures reflect the cost of replacing expended munitions and equipment lost in battle and increased fuel costs for the military, among other factors, the report said.

The analysis was prepared following a request by Brendan Boyle, the top Democrat on the House Budget Committee, alongside other Democratic lawmakers.

In July, Defense Secretary Pete Hegseth estimated the Iran war had cost $37.5 billion.

The CBO estimated Tuesday that the main economic effect of the Iran conflict involves inflationary pressures due to oil and natural gas disruptions.

Iran had retaliated in the war by blocking off the Strait of Hormuz, a critical waterway for energy transit, sending costs soaring.

The CBO now estimates that inflation in the first quarter next year would be 0.5 percentage points higher than what it projected in February -- referring to the personal consumption expenditures price index.

"Core" inflation, stripping out the volatile food and energy segments, would also likely be 0.3 percentage points higher than earlier predicted, the CBO said.

The higher inflation rates will also boost interest rates on Treasury securities, the report added.