Seven months into the U.S. war with Iran, sharply higher fuel prices are making it more expensive to drive and fly and are adding to the cost of some goods, prolonging the strain on American households as the midterm elections approach. The fighting has disrupted Middle East oil shipments, and the retail price impacts from the Iran war are uneven but cumulative.

How are retail price impacts from the Iran war affecting consumers?

Motorists and airline passengers have felt the clearest consequences of the disruption to Middle East oil shipments, according to the Associated Press. Some companies have raised delivery charges or lifted prices on selected products.

Even so, the higher cost of making and moving goods has not turned into across-the-board price increases at stores. Many businesses have absorbed at least part of their higher production and transportation costs rather than passing all of them to shoppers.

That restraint may not last. A September jump in wholesale prices suggests some businesses could eventually charge more if fuel prices stay elevated.

What is the total cost to households?

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. That figure breaks down into three parts:

  • $1,100 in higher energy prices
  • $540 in higher interest rates
  • $360 in military costs

Zandi said the energy portion is growing by $50 a week at current fuel prices.

Why does the timing matter before the midterms?

The price pressure arrives as voters prepare to cast ballots in the midterm elections, making household costs a live economic concern. Because the effects are spread unevenly across fuel, airfare, delivery fees and selected goods, shoppers may not see one large increase but rather a series of smaller ones that accumulate over time.

FAQ

Which costs have risen most clearly?

Fuel for driving and flying has risen most clearly, while some companies have also raised delivery charges or prices on selected products.

Have all store prices gone up?

No. Higher production and transportation costs have not produced across-the-board increases at stores, though a September rise in wholesale prices suggests more could follow if fuel stays high.