One Month Into the Iran War, Here Are All the Ways It's Costing Americans

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A month ago, analysts could only project what the Iran war might cost the average American. Now the wide-ranging toll is showing up in everyday budgets and weighing heavily on consumer sentiment.

"Americans are often thinking about [the war's costs] in terms of the price of gas," said Layna Mosley, who directs the Sovereign Finance Lab at Princeton University. "But the costs are a lot broader than that."

The Organisation for Economic Co-operation and Development last week revised its U.S. inflation forecast up 1.2 percentage points, setting the 2026 outlook at 4.2%, more than double the Federal Reserve's 2.0% target, as soaring oil prices work their way through the economy.

West Texas Intermediate futures, the U.S. crude oil price benchmark, surged Monday to close above $100 per barrel for the first time since the war began in late-February, disrupting global oil supply and sending fuel prices higher. WTI prices have risen nearly 60% over the period, as traffic through the Strait of Hormuz, a critical shipping lane, has been effectively halted by Iran.

Regular gasoline averaged $3.99 a gallon nationwide Monday, up more than $1 since the start of March, according to AAA. Bank of America's credit card data showed consumers spent 19% more on gasoline in the week ending March 21 than a year earlier.

"The effects of the Iran war are being felt differentially," Mosley said, with those most affected having lower incomes and thus paying a higher percentage of their paychecks at the pump.

Higher gas prices are also raising personal shipping costs, with FedEx (FDX) and United Parcel Service (UPS) adding fuel surcharges since the war began. On Wednesday, the U.S. Postal Service said it planned its own 8% surcharge. Likewise, fares for Uber (UBER) and Lyft (LYFT) will likely rise after the rideshare platforms rolled out "relief" programs for drivers facing higher fuel costs.

The cost of the Iran war isn't limited to the gas pump. Materials for everything from fertilizer to packaging to pharmaceuticals flow through the Strait of Hormuz, which means prices for most goods and many services will rise.

Diesel is at $5.42 a gallon, up $1.66 over the past month. Since most goods arrive by diesel truck, food prices are expected to rise. When diesel spiked after Russia's invasion of Ukraine in 2022, grocery prices followed within weeks. The same process is now underway.

The price of jet fuel, the second-highest cost for airlines, has jumped roughly 80% since the first strikes. United Airlines (UAL) CEO Scott Kirby told employees that at current prices, the fuel spike would add $11 billion to the airline's annual costs, more than triple its highest annual profits in recent years.

Those booking summer fares are already paying the price. July airfares are running about 18% above last year's prices, according to flight-deal platform Going. The International Air Transport Association puts the potential global fare increase at up to 9%, though flights between Europe and Asia, for example, have increased far more.

The U.S. Department of Agriculture's updated March forecast says food-at-home prices will rise 3.1% this year, but its forecast range extends as high as 6.1%, depending on economic conditions. Before the war began, USDA predicted that grocery prices would rise 2.5%, already above the increases in the previous two years.

The expected rise isn't just about diesel and transportation costs. Fertilizer markets are under severe stress during spring planting season.

About a third of globally traded fertilizer flows through the Strait of Hormuz, according to the United Nations, and that flow has all but stopped. Nitrogen fertilizer prices have risen 40% since the conflict began, Goldman Sachs said in a research note last week.

Earlier this month, the American Farm Bureau Federation warned the Trump administration that without guaranteed fertilizer deliveries, the U.S. "risks a shortfall in crops." Goldman estimates higher fertilizer costs alone could lift food prices by about 1.5% this year, before accounting for the broader energy shock rippling through supply chains.

The war's reach extends to your medicine cabinet. Almost half of U.S. generic prescriptions, which account for about 90% of all drugs dispensed in the U.S., are made in India, which relies on Gulf petrochemicals for producing pharmaceuticals.

Disruptions to those supplies could cause shortages and price increases for common drugs like antibiotics, blood pressure medications and diabetes treatments.

Electronics prices face a slower-moving but similar threat. Qatar produces about a third of the world's helium, which cools silicon wafers during semiconductor manufacturing. No viable substitute exists. Chipmakers would likely absorb the higher costs rather than halt production. Newer smartphones, laptops, and other consumer electronics are likely to cost more as they reach stores later this year. Helium also cools MRI magnets, so shortages could increase those costs as well.

Higher utility bills are expected, too. Natural gas generates more than 40% of U.S. electricity. As trading partners scramble for alternatives to Gulf supply, demand for U.S. liquefied natural gas exports has surged, likely raising heating bills.

Meanwhile, the market volatility is pushing up mortgage rates. The 30-year fixed mortgage rate, which had briefly dropped below 6% earlier this year for the first time since 2022, averaged 6.38% last week, according to Freddie Mac's weekly survey, up 16 basis points from the previous week. On a $400,000 loan, that week's increase alone would add more than $40 to a monthly payment.

Higher rates won't just hit would-be homeowners. "It certainly is going to put pressure on the U.S. in terms of spending money on debt servicing versus spending money on everything else the U.S. government wants to do," Mosley said.

That squeeze could make the federal government less willing to cushion an economic downturn with social spending on those most affected by the war's rising costs.

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