Iran conflict drives fertiliser and fuel costs higher, food price surge expected
Economists warn that agricultural input cost increases have yet to reach consumers, with poorest nations most vulnerable.
Iran conflict drives fertiliser and fuel costs higher, food price surge expected
Economists warn that agricultural input cost increases have yet to reach consumers, with poorest nations most vulnerable.
The conflict involving Iran, now approaching its second month, has caused worldwide surges in fuel and fertiliser prices, with economists warning that the impact on food costs has not yet materialised.12
Analysts said the delay between rising agricultural input costs and higher retail prices means the true effect on consumers remains ahead.1 Matin Qaim, executive director of the Center for Development Research at the University of Bonn, said food prices would "definitely rise in the coming months, making it more difficult for many people around the world to afford adequate and healthy diets."1
The severity of price increases depends largely on the duration of shipping disruption in the Strait of Hormuz, which normally carries approximately one-third of global seaborne fertiliser and one-quarter of seaborne oil.1 Qaim said poor populations in Africa and Asia would "be hurt the most because they have to spend a high share of their income on food anyway," adding that "hunger and undernutrition will very likely rise."1
Corporate earnings reports released this week reflected mounting pressure on businesses.2 AkzoNobel, which manufactures Dulux paint and specialty coatings, reported that its raw material costs would increase by roughly the high teens in percentage terms due to Strait of Hormuz disruption, with the full impact expected over the next two quarters.2 Chief executive Greg Poux-Guillaume said the conflict was pushing up supply costs, though the company beat market expectations through higher pricing and cost savings.2
Companies across sectors from consumer goods to travel and mining cited the conflict as a factor driving up costs, disrupting supply chains and weakening consumer confidence.2 The disruptions compound existing pressures from US tariffs, higher input costs and weak demand that predated the conflict's late February onset.2