Here's a sobering thought for anyone hoping the economy would bounce back quickly once the guns fall silent in the U.S.-Iran war: the inflation it sparked might stick around like an unwelcome guest long after the ceasefire. According to a Financial Times report, economists are warning that the economic fallout from the conflict is proving more stubborn than the fighting itself, with a wave of price increases set to linger well into the future.

Let's start with the numbers. U.S. inflation jumped to 3.3% in March, hitting its highest level in two years, and the culprit is pretty obvious—fuel costs. Gasoline prices have climbed from $2.98 per gallon when the conflict kicked off in late February to $4.08 as of last Friday, according to AAA. Diesel isn't faring any better, surging from $3.76 to $5.59 a gallon and inching toward its 2022 record. As IMF Managing Director Kristalina Georgieva put it, "We were on a very good trajectory of inflation going down. Now there is somewhat a reversal." She added a grim warning: this fallout won't "evaporate overnight even if the war ends tomorrow."

So, what's driving this? It all comes back to geography and oil. Iran's closure of the Strait of Hormuz—a narrow waterway that typically handles about a fifth of the global oil supply—triggered an immediate energy shock. Brent crude oil prices surged from around $70 a barrel to more than $110 at their peak. Even with a tentative ceasefire in place, Tehran announced over the weekend that the strait remains under its "strict control," which means the uncertainty isn't going away anytime soon.

But it's not just about what you pay at the pump. The ripple effects are spreading through the economy in ways that might not be immediately obvious. Take farming: nitrogen fertilizer costs have risen more than 30% since the conflict began, according to the American Farm Bureau Federation. Or travel: jet fuel prices have doubled. And companies are starting to sound the alarm. PepsiCo Inc. (PEP) CFO Steve Schmitt warned this week that consumer price increases are on the way, saying, "Our assumption is that inflation will come."

Economists are crunching the numbers, and they paint a picture of mounting damage. Mark Zandi noted on Sunday that the war has already pushed U.S. gasoline costs up by an estimated $21.3 billion over just six weeks. "The economic damage from the war with Iran is mounting," he wrote, adding that tax refund cushioning from the One Big Beautiful Bill Act—totaling roughly $47.1 billion—is expected to taper off in the coming weeks, leaving consumers with less buffer.

Looking ahead, the outlook isn't getting brighter. Economist Justin Wolfers warned Monday that the uncertainty around the Strait of Hormuz is lifting fuel futures through 2027 and beyond, suggesting that Energy Secretary Chris Wright's optimism might be "outdated." In a post on X, Wolfers summed it up bluntly: "Until we get resolution, expensive gas isn't going anywhere soon."

On the official side, Treasury Secretary Scott Bessent acknowledged that growth might be slower this quarter due to the conflict, but he pointed out that the economy was in "such good shape" before the war began. He described the economic impact as "path dependent" on how long the conflict lasts—a diplomatic way of saying we're not out of the woods yet.

The big institutions are adjusting their forecasts accordingly. The International Monetary Fund now projects U.S. inflation at 3.2% for 2026, up from a pre-war estimate of 2.5%. The Organisation for Economic Co-operation and Development has made an even starker revision, raising its forecast from 2.8% to 4.2%. In short, the economic hangover from this war looks set to last, whether the fighting stops tomorrow or not.