Iran war has cost average US household nearly $2,000, Zandi says

The U.S. war with Iran has cost the average American household the equivalent of almost $2,000, according to Moody's Analytics Chief Economist Mark Zandi. He estimated the total this week at $1,100 in higher energy prices, $540 in higher interest rates and $360 in military costs. The energy portion grows by another $50 a week at current fuel prices, Zandi said.

More than seven months into the fighting, the bill lands unevenly. Drivers and airline passengers pay it directly. Some companies have raised delivery charges or prices on selected products. But higher production and transport costs have not yet produced across-the-board price increases at stores.

That grace period may not last. Many companies have absorbed part of their higher costs. A September jump in wholesale prices suggests some businesses will eventually charge more if fuel stays expensive.

How much more does a tank of gas cost?

Before the war, regular gasoline averaged $2.98 a gallon nationwide and diesel $3.76, according to AAA. Gas peaked at $4.56 in May, below its 2022 record. Diesel hit a record $6.53 in September.

On Friday, the national average stood at $4.33 a gallon for gasoline — 45% above its prewar level — while diesel was up 68% at $6.33, AAA reported. Gas normally gets cheaper in the fall. This is the first October a gallon of regular has cost more than $4 on average.

Diesel matters less at the pump and more in the supply chain. It raises the cost of moving goods and feeds overall inflation.

Shipping through the Strait of Hormuz remains dangerous and constrained. The Energy Information Administration said this month it expects winter heating costs to rise 21% for the roughly 3% of households that heat with oil, most of them in the Northeast, assuming mild weather.

Why are airfares climbing?

Jet fuel averaged $99 a barrel worldwide before the war, according to the International Air Transport Association. It doubled to $209 in April and climbed back to nearly $195 in September after a spring decline.

Airlines have raised ticket prices and fees, trimmed schedules and shelved plans to add flights. Airfares cost about 22% more in September than a year earlier, the consumer price index showed. The U.S. Bureau of Transportation Statistics put average domestic fares at $445 for April through June, up from $405 in late 2025, excluding optional fees.

United Airlines pulled some December flights and warned of further possible cuts in 2027. Fewer seats means less pressure to hold prices down. Analysts said fuel volatility could keep airlines from cutting fares even when fuel falls. Higher fares covered substantial portions of domestic airlines' fuel costs, but not enough to prevent a squeeze on third-quarter profits, consensus estimates show.

Will grocery prices accelerate?

The USDA initially expected grocery prices to rise 1.7% this year. It now expects 2.4%. Grocery prices in September were about 22% higher than five years earlier.

Cornell economics professor Chris Barrett said he was surprised prices haven't risen faster given higher costs for diesel, fertilizer and refrigeration. USDA raised its 2026 fertilizer cost estimates for major crops by 9% to 13%, and fuel, lubricant and electricity estimates by 33% to 41%.

Barrett suspects retailers are absorbing increases to avoid alienating fed-up customers. He sees "very little prospect" of a significant drop in fuel prices that would ease pressure on farmers and truckers. Experts warn that fresh produce and other frequently replenished perishables could respond quickly to higher transport and refrigeration costs. A strengthening El Niño could damage crops, the U.N. Food and Agriculture Organization said, though ample inventories and good harvests elsewhere may limit the effect.

What about shoes and shipping?

Nearly all shoes sold in the U.S. are imported, and roughly 70% of the materials in a synthetic shoe are petrochemical-based, according to Footwear Distributors and Retailers of America. Footwear prices were 3.4% higher in September than a year earlier; men's shoes rose 4.5%.

"Footwear companies are working hard to keep shoes affordable, but there is a limit to how much additional cost businesses can absorb before those pressures reach consumers," FDRA President and CEO Matt Priest said.

Transportation and warehousing of goods sold to businesses cost 10.2% more in September than a year earlier, producer-price data showed. Truck and water freight prices each rose 19.3%. The U.S. Postal Service raised base prices 8% in April for Priority Mail Express, Priority Mail, Ground Advantage and Parcel Select, citing transportation costs. UPS, FedEx and DHL also impose fuel surcharges.

AFS Logistics and TD Cowen project record parcel costs this quarter and the highest truckload rates since early 2022. "We expect fuel to drive elevated transportation costs for the foreseeable future," AFS CEO Andy Dyer said.

With the midterm elections approaching and holiday shipping season starting, households face a simple question: how long can companies keep absorbing costs before the war's remaining bill arrives at the register.