Is the milk in my cereal blocking my absorption of iron?

Probably: Milk does indeed inhibit absorption of iron. Ideally iron containing foods should be consumed with citrus containing foods, as this enhances iron absorption. If you anemic and on iron, it is best you don't eat dairy around the time you take your iron supplement. If you are talking about the iron in the cereal, keep the milk to a minimum or find an alternative source of iron other than the cereal.