How the War in Iran Is Contributing to Soaring Food Prices

Fertilizer, diesel, and natural gas all have an impact on food. The impact first shows up in producer prices, then consumer prices.

PPI Percent Change from Year Ago

• Finished Consumer: 2.1 percent
• Slaughter Cattle: 17.7 percent
• Slaughter Poultry: -5.6  percent
• Slaughter Hogs: 8.6 percent
• Unprocessed Food and Feed: 3.1 percent
• Processed Meat Poultry Fish: 6.4 percent
• Processed Meat: 8.4 percent
• Fresh and Dried Vegetables: 56.3 percent
• Fruits, Vegetables, Nuts: 19.5 percent 
• Large Eggs: -81.0 percent (unshown because it blows the scale)

Three things are clear.
We are not talking enough about chicken, eggs, or the Dow.

How the Iran War Is Shaking Up Food Supply Chains

Bloomberg comments How the Iran War Is Shaking Up Food Supply Chains

The arid Persian Gulf is hardly the world’s breadbasket. Yet the conflict in the region is sending shockwaves through the global food industry — from growers to packaging firms and distributors — with major implications for food security and living standards.

The war has cut off important sources of energy and fertilizers that are key inputs in the production of grains, vegetables and meat. Farmers whose crop yields were already squeezed by bouts of extreme weather now face paying more for those crucial inputs and are likely to pass on the cost to consumers through higher prices.

Their other option is to cut back on fertilizer and other inputs, lowering yields and raising the risk of food shortages, especially in poorer countries that rely heavily on imports. The United Nations’ World Food Programme has warned that a prolonged conflict could lead to record levels of global hunger.

How is the war affecting fertilizer production?

The Gulf region has become a significant producer of nitrogen fertilizers in recent decades, and the Strait of Hormuz was handling about a third of the global trade before the war broke out. The Gulf is also a major supplier of sulfur, which is needed for production of other types of fertilizers. The conflict has severely disrupted exports from the region, sending prices soaring and farmers scrambling to secure enough of the products while they can. Soaring gas prices have put European production under strain.

There are signs that farmers have cut back on fertilizer purchases as a result. If the disruption persists, they are likely to lower their use of the products in the fall, leading to lower crop yields next year.

“This is not only a price shock. It could also become a production shock with a lag built in,” said Wesley Davis, an economist at Meridian Agribusiness Advisors.

How else is the Iran war disrupting the food industry?

There is no modern food production without energy. Diesel-powered tractors till the soil and a lot of fresh produce is grown in gas-heated glasshouses. Oil-based fuels power the ships, planes and trucks that transport food over long distances in today’s globalized economy.

Then there’s packaging. The Middle East region supplies about one-third of globally traded naphtha, used to produce plastic wrappings, according to Rabobank. Paper and cardboard production is also energy intensive. In Malaysia, a shortage of plastic resin used to make 2-liter milk bottles has left some grocery shelves bare. In Japan, a shortage of ink has led Japan’s biggest potato-chip maker to switch its packets to black and white. The country may be heading for a banana shortage, too, because supplies of ethylene used to ripen the fruit are running low.

What will it all mean for food prices in stores?

Before the Iran war broke out, food inflation around the world was generally expected to ease this year. Food commodity costs are still well below their peak of March 2022, but the impact of the war has started to feed through into official price gauges. Global food commodity costs climbed to a three-year high in April, the United Nations’ Food and Agriculture Organization said. It warned that the closure of the Strait of Hormuz could trigger a major global food price crisis within the next six to 12 months.

World Food Situation

The Food and Agricultural Organization reports Food Price Index extends upward trend amid higher vegetable oil, meat and cereal prices

• The FAO Food Price Index (FFPI) averaged 130.7 points in April 2026, up 2.1 points (1.6 percent) from its revised March level, marking a third consecutive monthly increase, albeit at a lower rate than in the previous month. Price indices for vegetable oils, meat and cereals rose to varying degrees, offset by declines in sugar and dairy products. Compared to historical levels, the FFPI in April stood 2.5 points (2.0 percent) higher than a year ago but remained as much as 29.6 points (18.4 percent) below its peak in March 2022.
• The FAO Cereal Price Index averaged 111.3 points in April, up 0.9 points (0.8 percent) from March and 0.4 points (0.4 percent) from its level a year earlier. The monthly increase reflected higher prices across major cereals, except sorghum and barley. World wheat prices increased by 0.8 percent, reflecting upward pressure from drought in parts of the United States of America and a higher likelihood of below-average rainfall in Australia. The price increase was further supported by expectations of reduced wheat plantings in 2026, as farmers shift to less fertilizer‑intensive crops amid high fertilizer prices, driven by elevated energy costs and disruptions linked to the effective closure of the Strait of Hormuz.
• The FAO Vegetable Oil Price Index averaged 193.9 points in April, up 10.9 points (5.9 percent) from March and reaching its highest level since July 2022. The continued increase was driven by higher prices of palm, soy, sunflower and rapeseed oils.
• he FAO Meat Price Index averaged 129.4 points in April, up 1.6 points (1.2 percent) from March and 7.8 points (6.4 percent) above its level a year earlier, reaching a new record high. The increase reflected higher prices across all meat categories, except ovine meat quotations, which remained broadly stable. Bovine meat prices rose to a new peak, underpinned by higher export quotations in Brazil amid limited supplies of slaughter-ready cattle, reflecting ongoing herd rebuilding.
• The FAO Dairy Price Index averaged 119.6 points in April, down 1.3 points (1.1 percent) from March, while remaining 32.1 points (21.2 percent) below its level a year earlier. The decline was mainly driven by lower international quotations for butter and cheese, which more than offset continued increases in the prices of skim milk powder (SMP), while whole milk powder (WMP) prices remained broadly stable.
• The FAO Sugar Price Index averaged 88.5 points in April, down 4.3 points (4.7 percent) from March and as much as 23.8 points (21.2 percent) from a year ago. The drop in April was mainly driven by expectations of ample global supplies in the current season, reinforced by improved production prospects in key Asian producing countries, notably China and Thailand. The onset of the new harvest in Brazil’s key southern growing regions under favourable weather conditions further contributed to the overall decline in international sugar prices.

PPI Food Prices

Four Key PPI Food Points

• Producer prices for food were stable or rising slowly ahead of the Covid pandemic.
• Prices skyrocketed in the pandemic but did not fall back to the previous trendline.
• Prices are now steeply rising again, on average, due to disruptions from a war that should never have been started.
• In addition, US cattle herd sizes are at extremely low levels contributing to the surge in beef prices.

Trump is boxed in on agriculture and the War in Iran.

On May 17, 2026, I noted Ground Beef Soars to $6.90 per Pound. Trump Has No Winning Actions

Trump is boxed in on agriculture and the War in Iran.

There is no grocery store price gouging. Prices at the store and prices you pay are rising lockstep with the Producer Price Index (PPI) for slaughter cows.

Trump is also investigating major meatpackers for collusion, but that’s nonsense as well. Ten meatpackers are not going to be more efficient than four.

Related Posts

May 26, 2026: Consumer Credit Stress Is Comparable to the Great Recession

Auto delinquencies are at a new record and credit cards are near record high.

May 28, 2026: Inflation Expectations Surge in Two Distinct Consumer Confidence Surveys

57% of consumers say high prices are eroding their personal finances.

May 28, 2026: PCE Inflation Spikes Again, Year-Over-Year Highest Since May 2023

Year-over-year PCE inflation jumped to 3.8 percent. The Fed wants 2.0 percent.

June 2, 2026: Trump’s Economic Director Claims Real Incomes Are Going Up

Let’s do a fact check on the administration’s claim.