WASHINGTON (Reuters) – The United States' war in Iran has cost $29 billion so far, a senior Pentagon official said on Tuesday, an increase of $4 billion from an estimate provided late last month.
With just six months before midterm elections in which President Donald Trump's Republicans may face an uphill battle to keep their House majority, Democrats are riding high in public opinion polls as they attempt to link the war with cost of living issues.
On April 29, the Pentagon said the war at that point had cost $25 billion.
Jules Hurst, who is performing the duties of the comptroller, told lawmakers on Tuesday that the new cost included updated repair and replacement of equipment and operational costs.
"The joint staff team and the comptroller team are constantly looking at that estimate," Hurst said. He was speaking alongside Defense Secretary Pete Hegseth and Chairman of Joint Chiefs of Staff, General Dan Caine.
It is unclear how the Pentagon arrived at the $29 billion figure. A source told Reuters in March that Trump's administration estimated the first six days of the war had cost at least $11.3 billion.
Meanwhile, US consumer prices increased at a brisk pace for a second straight month in April as the war with Iran pushed up energy costs and food prices surged, heightening political risks for President Donald Trump and his Republican party ahead of November's midterm elections.
The back-to-back increases in the Consumer Price Index reported by the Labor Department on Tuesday culminated in the largest annual increase in inflation in three years. Trump won re-election in 2024 in large part because of his promise to reduce inflation, but Americans have soured on his handling of the economy and many blame him for the pain at the pump.
The strong inflation readings added to data last week showing a larger-than-anticipated increase in nonfarm payrolls in April in strengthening economists' expectations that the Federal Reserve would keep interest rates unchanged into 2027.
"There is a real financial squeeze underway," said Heather Long, chief economist at Navy Federal Credit Union. "For the first time in three years, inflation is eating up all wage gains. This is a setback for middle-class and lower-income households and they know it."
The CPI increased 0.6% last month after surging 0.9% in March, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast the CPI rising 0.6%. Estimates ranged from a 0.4% gain to a 0.9% increase.
The moderation after posting the largest increase since June 2022 was mostly mechanical. Oil prices shot above $100 a barrel in March following strikes against Iran by the U.S. and Israel, before pulling back to still-high levels after a ceasefire in early April. The war's impact was immediately reflected in more expensive gasoline, diesel and jet fuel. Economists believe the second-round effects would be felt in the months ahead.
A 3.8% increase in energy prices accounted for more than 40% of the rise in the CPI last month. That followed a 10.9% jump in March. Gasoline prices rose 5.4%, while fuel oil increased 5.8%. Consumers also paid higher prices for electricity.
Food prices accelerated 0.5% after being unchanged in March. Grocery store inflation shot up 0.7%, driven by a 2.7% increase in beef prices. Fruits and vegetable prices rose 1.8% while nonalcoholic beverages cost 1.1% more. There were also strong increases in the prices of dairy and eggs.
GLOBAL SUPPLIES GROWING TIGHT
In the 12 months through April, the CPI advanced 3.8%. That was the biggest year-on-year increase since May 2023 and followed a 3.3% rise in March. The US central bank, which tracks the Personal Consumption Expenditures price indexes for its 2% inflation target, last month left its benchmark overnight interest rate in the 3.50%-3.75% range.
US stocks opened lower. The dollar rose against a basket of currencies. US Treasury yields were higher.
"With no clear end to hostilities in sight, the primary catalysts for the increase in inflation - energy, oil, gasoline, transportation, and food - are all poised to jump higher in coming months as global supplies grow tight and supply chain stress rises," said Joseph Brusuelas, chief economist at RSM.
Excluding food and energy, the CPI climbed 0.4% last month. That was the largest gain since January 2025 and partly reflected a one-time adjustment to rent measures after last year's shutdown of the federal government prevented data collection.
The BLS splits its rent survey into six panels. Each panel is sampled every six months on a rotating basis. The BLS used a method called carry-forward imputation for rent and OER to account for the missing data, which had artificially lowered the rent indexes. The so-called core CPI increased 0.2% in March.
Rent of shelter jumped 0.6% after rising 0.3% in March.
Owners' equivalent of rent increased 0.5%. High jet fuel prices drove up airline fares 2.8%.
Elsewhere, apparel and footwear prices rose strongly. Household furnishings and operations prices increased 0.7%. Some economists had believed that the pass-through from Trump's sweeping tariffs was over.
The US Supreme Court struck down the duties in February, lowering the effective tariff rate. Core CPI inflation advanced 2.8% year-on-year in April after rising 2.6% in March.