American officials who once expected a swift end to the war are now sitting across the table from their Iranian counterparts as the economic cost of the war begins to mount.
The US has spent millions of dollars on military operations, and the economy has begun to show warning signs in retail inflation, particularly in energy.
Retail inflation in the US jumped to a near two-year high of 3.3 per cent in March 2026. This was a sharp increase from 2.4 per cent in both February and January, according to the US Bureau of Labour Statistics. Food prices rose by 2.7 per cent, while energy prices climbed by 12.5 per cent. This is the highest level of energy inflation since November 2022.
Within the energy sector, fuel oil prices rose by 44.2 per cent while gasoline surged by 18.9 per cent. These figures are considered the first significant macroeconomic signals of the Iran conflict emerging from within the US itself.
While the US inflation has gone beyond the roof, Europe is also not immune to these shifts. The March 2026 inflation rate in Europe has reached a high not seen in over a year. The Euro Area recorded retail inflation of 2.5 per cent in March, compared to 1.9 per cent in the previous month. High energy prices remain the primary driver, with energy inflation rising by 4.9 per cent according to Eurostat.
“In Europe, the shock is reviving the spectre of the 2021-22 gas crisis, with countries such as Italy and the United Kingdom especially exposed by their reliance on gas-fired power, while France and Spain are relatively protected by their greater nuclear and renewables capacity,” an International Monetary Fund blog said.
This exposure stems from Europe’s high dependence on imported energy, with nearly 60 per cent of the EU’s energy needs met by imports.
Even as peace talks continue, threats continue to flow between the US and Iran. If negotiations fail and the war escalates, the global economy stands to lose. Heavy energy importers will pay the direct price, while those less reliant on imports may bear the indirect costs.
