The Iraq War is expected to push up US inflation by 0.5 percentage points in Q1 of next year. The CBO reports that it has already spent $38 billion and expects to spend another $3 billion per month.

A new report from the Congressional Budget Office (CBO) shows that the six-month-long war in Iraq has cost slightly more than expected and poses a profound threat to U.S. military preparedness and financial health.

According to a report released by the CBO on Tuesday, the cumulative U.S. spending on the Iraq war as of August 1 has reached $38 billion, with an estimated additional $3 billion per month thereafter. This figure is higher than the $37.5 billion disclosed by Defense Secretary Pete Hegseth at a Senate hearing in July.

The CBO also predicts that the war will cause the U.S. inflation rate to rise by 0.5 percentage points in the first quarter of 2027.

The report points out that the war has severely depleted U.S. ammunition stocks and, by disrupting the Strait of Hormuz energy corridor, has driven up global oil prices, further straining the already tight federal budget. The CBO estimates that it will take the U.S. at least five years to replenish its current ammunition stocks.

It is worth noting that the aforementioned $38 billion does not include the costs of recent strikes against commercial vessels in the Strait of Hormuz, attacks on U.S. military bases in the region, or the borrowing costs of war financing—the latter could add tens of billions of dollars more.

Furthermore, the CBO report noted that the Department of Defense refused to cooperate with the congressional financial audit.

Ammunition consumption is severe, and military preparedness is compromised.

The CBO report attributes the bulk of the war expenditure to the rapid depletion of ammunition. Media reports indicate that the United States has used "almost its entire" stockpile of long-range precision-guided missiles in this war.

The CBO warned that shortages of critical munitions such as missile interceptors would weaken the Pentagon's ability to respond to other potential conflicts.

During a Senate hearing in July, Hegseth urgently requested nearly $90 billion in emergency funding to replenish ammunition reserves, stating explicitly, "Without this funding, we will face a severe shortfall."

This audit investigation was initiated at the request of Representative Brendan Boyle, the ranking Democrat on the House Budget Committee and a representative from Pennsylvania. In a statement, Boyle said the war has resulted in the deaths of 18 American service members and injuries to many others.

"This nonpartisan CBO report clearly shows that this war has cost American taxpayers tens of billions of dollars, and the cost continues to rise."

The double whammy of energy shocks and fiscal pressures

The Strait of Hormuz is a vital global energy corridor, through which approximately 20% of the world's oil was transported before the war. The war damaged the strait and impacted energy facilities in neighboring Gulf states, significantly increasing energy costs for consumers and global producers.

Meanwhile, the ongoing war is exacerbating the already deteriorating US fiscal situation. The total US public debt surpassed $40 trillion in August. The CBO's cost statistics do not yet include borrowing costs, meaning the actual total cost of the war may be far higher than currently estimated.

The Trump administration is currently seeking to end the conflict and reopen the Strait of Hormuz. Trump himself has often compared the war in Iraq to the U.S. invasions of Iraq and Afghanistan after 9/11 in 2001.

According to media reports, the Iraq War, which lasted eight years and at its peak involved over 100,000 ground troops, cost approximately $2 trillion; the Afghan War, which lasted twenty years and also mobilized over 100,000 troops, cost approximately $2.3 trillion. In comparison, the current war in Iraq, which is costing $3 billion per month, has raised serious concerns in the market and Congress about its long-term fiscal sustainability.

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