The Iran war's tab is coming due: Inflation is set to spike — and Americans are already feeling it

• Friday's inflation report will offer a look at what the Iran war made more expensive in March.
• The increase is expected to be the biggest in two years.
• From cars to air travel and food, inflationary pressures are already showing up across the economy.

If you've ever put your credit card down at happy hour, you know how trepidatious it can be when that final bill comes. You know it's going to sting. It's just a question of how much.

That's how this week's inflation report feels. Due on Friday, it's going to show Americans how much the Iran war has run up our national tab.

The forecasts right now are grim. The consensus estimate is for a 3.4% consumer-price index (CPI) increase from a year ago. That's up from 2.4% last quarter, and would be the biggest year-over-year jump in two years.

Based on what's happened during past oil-market shocks, Bloomberg Economics finds that the commodities most likely to see higher prices are jet fuel, steel, aluminum, natural gas, fertilizer, and plastics. The pinch is already being felt across the industries that use these materials.

Automobile manufacturing relies on steel, aluminum, and plastic, and prices are being pushed higher for new cars, then on through to used inventory. New data from Cox Automotive shows used-car prices at their highest in nearly three years.

The airline industry, meanwhile, has felt the pinch of rising jet-fuel prices. Major airlines have started canceling flights in response, while a growing number are hiking checked-bag fees to offset the drag of fuel costs.

Not to be left out, food prices are expected to increase alongside the cost of fertilizer, which is critical for farming. From the grocery store to the gas pump, the war has made life more expensive for Americans.

Now that the Iran war is several weeks old, worries have expanded from the initial shock of higher oil prices toward the compounding effect of a prolonged conflict. For a growing number of economists, the scariest part is not what's staring us in the face — it's the hidden aftershocks we won't feel for months, or even years.

Big hitters have consistently spoken out about their worries. JPMorgan CEO called inflation the "skunk at the party" that could spoil stock returns in 2026.

Harvard professor and former IMF chief Ken Rogoff recently discussed an overlooked impact of the war: what increased military spending will do to an already-fraught US budget deficit. He says the situation risks a bond-yield spike, which could hurt stocks and impact US affordability.

Rogoff also says that the existing disruption from the Iran war is enough to keep oil prices elevated for a year.

The Federal Reserve's plan to fight these inflationary forces will hinge at least partially on the March CPI data due out Friday. Any hot surprise to the upside will likely be met with renewed cries for rate hikes — something the Fed will be reluctant to do with the labor market so weak.

It's quite a bind — one of many created by the Iran war.