NewsMacroIran War Has Cost the Average U.S. Household Nearly $2,000 So Far, Moody's Economist Says — and the Energy Portion Grows $50 a Week

Iran War Has Cost the Average U.S. Household Nearly $2,000 So Far, Moody's Economist Says — and the Energy Portion Grows $50 a Week

Author: Fortune Crypto·

Key Takeaways

  • •The war has cost the average U.S. household nearly $2,000, comprising $1,100 in higher energy prices, $540 in higher interest rates, and $360 in military costs, according to Moody's Analytics chief economist Mark Zandi.
  • •National gasoline prices stood at $4.33 a gallon, 45% above prewar levels, while diesel rose 68% to $6.33, making this the first October in which regular gas averaged more than $4.
  • •September airfares were about 22% higher than a year earlier, and United Airlines has pulled some December flights while warning of possible further schedule cuts in 2027.
  • •The USDA raised its grocery price forecast for the year from 1.7% to 2.4%, though experts believe retailers are absorbing some higher diesel, fertilizer, and refrigeration costs to avoid alienating customers.
  • •The U.S. Postal Service raised base package prices 8% in April, truck and water freight services each rose 19.3% year-over-year, and analysts project record parcel costs this quarter even if oil prices ease.
Iran War Has Cost the Average U.S. Household Nearly $2,000 So Far, Moody's Economist Says — and the Energy Portion Grows $50 a Week

More than seven months after the United States went to war with Iran, sharply elevated fuel prices have made driving and flying more expensive and pushed up the cost of some goods, extending the financial strain on American households as midterm elections approach.

Motorists and airline passengers have felt the clearest effects as the fighting disrupts Middle East oil shipments. A number of companies have raised delivery charges or lifted prices on selected products. So far, though, the higher cost of making and moving goods has not translated into sweeping price increases on store shelves.

That reprieve may not last. Many businesses have absorbed at least part of their increased production and transportation costs, and a September surge in wholesale prices suggests some may eventually charge more if fuel prices stay elevated.

Mark Zandi, chief economist at Moody's Analytics, estimated this week that the war has cost the average U.S. household the equivalent of almost $2,000 — including $1,100 in higher energy prices, $540 in higher interest rates and $360 in military costs. At current fuel prices, the energy portion is growing by $50 a week, he said.

Here is a look at how prices have moved since the war began, and which goods and services could be most vulnerable to further increases in the months ahead.

Gasoline and Diesel

Before the war: Regular gasoline averaged $2.98 a gallon nationwide and diesel $3.76 nearly eight months ago, according to AAA. Gas peaked at $4.56 in May — below its 2022 record — while diesel hit an all-time high of $6.53 in September.

What has reached consumers: The national average stood at $4.33 a gallon for gasoline on Friday, 45% above its prewar level, while diesel was up 68% at $6.33, AAA reported. Gas normally gets cheaper in the fall, and this is the first October in which a gallon of regular has averaged more than $4.

Expensive diesel is less visible to most Americans but feeds overall inflation by raising the cost of moving goods.

What could come next: Shipping through the Strait of Hormuz remains dangerous and constrained, prolonging uncertainty over oil supplies and fuel prices. The Energy Information Administration said this month that it expects winter heating costs to be 21% higher for the roughly 3% of households that rely on heating oil — most of them in the Northeast — assuming the weather is mild.

Air Travel

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

What has reached consumers: Airlines have raised ticket prices and fees, trimmed schedules and shelved plans to add flights. Airfares in September were about 22% higher than a year earlier, according to the consumer price index. Average domestic airfares rose from $405 in late 2025 to $445 in the April-through-June period of this year, excluding optional fees, according to the U.S. Bureau of Transportation Statistics.

What could come next: Fuel price volatility makes planning harder for airlines and could discourage them from lowering fares even when fuel prices start to fall, analysts said. United Airlines pulled some December flights and warned of further possible cuts in 2027. Fewer available seats could ease the pressure to hold ticket prices down.

Higher fares have covered a substantial portion of the added fuel expense for domestic airlines, but not enough to prevent a squeeze on their third-quarter profits, according to consensus estimates.

Groceries

Before the war: The U.S. Department of Agriculture initially expected grocery prices to rise 1.7% this year, below the historical annual average. The USDA now expects a still comparatively modest 2.4% increase.

What has reached consumers: Individual food prices are volatile, and it is unclear how much of this year's expected increase is due to the war and how much stems from other factors, including tariffs, unfavorable weather and higher labor costs.

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

Barrett suspects retailers are absorbing some of the increases to avoid alienating customers already weary from multiple years of food inflation. Grocery prices in September were about 22% higher than five years earlier.

What could come next: Experts have warned that fresh produce and other frequently replenished perishables could respond quickly to higher transportation and refrigeration costs. Barrett sees “very little prospect” of a significant reduction in fuel prices that could ease the pressure on farmers and truckers.

A strengthening El Niño weather pattern could damage crops through drought, heat or flooding, the U.N. Food and Agriculture Organization warned. That could lift commodity prices, although ample inventories and good harvests elsewhere may limit the impact on groceries.

Footwear

Before the war: 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. The industry trade group opposed Trump administration tariffs last year.

What has reached consumers: Footwear prices were 3.4% higher in September than 12 months earlier, according to the consumer price index. Men's shoes rose the most, up 4.5%.

What could come next: While import costs are down from a ago, the trade group said oil prices, tariffs and geopolitical uncertainty are likely to keep retail shoe prices rising into 2027.

“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.

Shipping and Delivery

Before the war: The cost of moving goods and delivering packages was already increasing and depended on more than fuel.

What has reached consumers: The pass-through is unclear. September producer-price data showed that transportation and warehousing of goods sold to businesses as inputs cost 10.2% more than a year earlier. Prices for truck and water freight services each rose 19.3%. The indexes measure what transportation providers charged but do not show how much of the increase appeared in retail prices.

Consumers have felt the higher costs most directly when sending packages. The U.S. Postal Service raised base prices 8% in April for Priority Mail Express, Priority Mail, Ground Advantage and Parcel Select, citing increased transportation costs. UPS, FedEx and DHL also impose fuel surcharges on many shipments.

What could come next: Shipping costs could remain elevated during the holiday season even if oil prices ease. Third-party provider AFS Logistics and financial services company 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 Logistics CEO Andy Dyer said.

Although UPS and FedEx surcharges could decline if diesel and jet fuel prices fall, changes to carrier surcharge formulas, holiday fees and tight trucking capacity could keep total shipping bills elevated, AFS said.

This story was originally reported by Fortune.