The U.S. and Iran have struck a peace agreement that could end a monthslong conflict in the Middle East and restore global oil supplies, but some analysts have warned that consumer prices may take some time to return to pre-war levels.
Inflation recently hit a three-year high, and some analysts warn consumer prices may take some time to come down.
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The average price for a gallon of gas in the U.S. fell below $4 as of Thursday, as prices have dropped in each of the last 28 days after peaking at $4.56 in May, the longest such streak since November 2023, according to AAA data.
Iranian President Masoud Pezeshkian signed an interim peace deal on Thursday after President Donald Trump did the same hours earlier, and Pakistani Prime Minister Shehbaz Sharif noted the Strait of Hormuz—through which about one-fifth of the global oil supply flows—would be “instantly” reopened under the deal.
Even if boats start moving through the Strait of Hormuz, it would be a “very long, multi-month to multi-year process for things to fully normalize,” Patrick De Haan, GasBuddy’s petroleum expert, told CBS, adding pre-war gas prices likely would not be reached until “mid-to-late” 2027.
Economist Mohamed El-Erian wrote that it was too soon to give an “all clear” for the global economy following the peace deal, that reopening the Strait of Hormuz “is not as simple as flipping a switch,” and that even with a final agreement, “economic scarring” is likely to persist, including higher consumer prices.
Other analysts have warned that, after businesses passed through surging energy prices onto consumers, a peace deal would not immediately lower costs: Kathy Bostjancic, Nationwide’s chief economist, wrote in April that even with a long-lasting agreement to end the war and the Strait of Hormuz is reopened, “it would take months for oil, gasoline, diesel and other commodity supplies to snap back to pre-war levels and thus for prices to settle back to pre-conflict levels.”
The University of Michigan’s consumer sentiment reading dropped to a record low in May as Americans expressed pessimism over rising costs. At the time, survey director Joanne Hsu said peace talks in the Middle East are unlikely to boost sentiment until oil supply disruptions were fully resolved and energy prices fell. In the survey, Americans’ views of their current financial situation fell to their lowest level since 2009.
The price of a basic grocery basket featuring 11 common items, including eggs, milk and ground beef, increased by more than 55% between June 2020 and April 2026, when inflation rose following the start of the Iran war, according to Forbes’ estimates. Several items reached record-high prices, including coffee, beef and orange juice, which rose 115%, 45% and 107% over that period, respectively.
Trump has dismissed Americans’ economic concerns, saying on Wednesday that affordability is a “fake word,” even as inflation reached a three-year high in May. His comments followed another statement last week in which Trump said he “loves the inflation” caused by the Iran war, after Bureau of Labor Statistics data showed consumer prices rose 4.2% annually in May, the steepest rate since April 2023. Surging costs accounted for more than 60% of the monthly increase, federal data showed. Trump’s statement contrasted with an earlier comment from Vice President JD Vance, who on Tuesday called the affordability problem “very real.”
ForbesWhat We Know About Potential $300 Billion For Iran In Peace DealForbesIran War’s Inflation Impact: Energy Prices Surged In Largest Gain Since 2005By Ty RoushForbesHere’s How A Typical Bag Of Groceries In 2020 Costs Over 50% More TodayBy Ty Roush
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