‘You can never really catch up’: The Iran War is exacerbating already high grocery bills and it will only get worse if the war continues, experts say
The U.S., Israel, and Iran agreed to a two-week ceasefire on Tuesday, but the sticker shock you’ve been feeling every time you go to the grocery store will get worse if the war continues. One of the f…
The U.S., Israel, and Iran agreed to a two-week ceasefire on Tuesday, but the sticker shock you’ve been feeling every time you go to the grocery store will get worse if the war continues. One of the first places you’ll feel it will be the produce aisle, experts say.
A Fortune analysis of produce wholesale prices from USDA data found grocery-cart staples such as tomatoes, bananas, and yellow onions have experienced significant price spikes since the war began. The United Nations reported its global food price index rose by 2.4% in March, the second consecutive month of rising prices.
“The big recent changes are the war causing spikes in diesel, fertilizer, and chemical prices,” Jeffrey Dorfman, professor of agricultural and resource economics at North Carolina State University, told Fortune.
USDA predicted food prices will increase by 3.6% in 2026, but soaring fuel prices should only lead to a 1% to 2% increase on produce, Dorfman said.
How fuel prices affect grocery prices
To understand how fuel prices are actually affecting your grocery bill, it’s important to look at how much energy affects food prices. Fossil fuels used to make oil, diesel, and fertilizer used in farming and distribution account for between 15% and 30% of produce costs, Dorfman explained. If fuel prices increase by 30%, like they have since the war began, produce, which accounts for about a fifth of a shopping cart, will increase by just 1% to 2%, Dorfman estimated.
Shipping costs are also a key factor in price increases. This time of year, most produce in the U.S. comes from Florida, Arizona, California, and Mexico, Dorfman said. If you live farther from these places, and food has to travel longer, you will see more of an effect on prices, he said.
Other factors impacting grocery prices
Fuel prices are not the whole story.
Grocery prices were facing upward pressure even before the war in Iran, Dorfman said. A growing labor shortage due to limited immigration, drought, and overall inflation have all led to price increases, he said.
Labor, which contributes to about half of the cost of groceries, was the single biggest contributor to higher prices before the war, Chris Barrett, professor of applied economics and management at Cornell University, who studies international agriculture, told Fortune.
“Labor shortages have been a very real feature of the food value chain over the last 14 months, and that means that they’re having to pay more for overtime,” he said. “They’re having to pay more to get or to keep workers because they’re losing workers as people have been detained or deported.”
In October, the Department of Labor filed a report with the Federal Register, estimating that 42% of the U.S. crop workforce is unable to enter the country, faces potential deportation, or is leaving the U.S.
Another key factor is electricity prices beyond fuel and diesel, Barrett said.
“Energy is also embedded in your grocery bill,” he said. “Just think of all the refrigerated trucks you see moving fruits and vegetables and dairy products around. Think of all the refrigeration and freezers in the grocery store. Think of all the electricity running the machinery that does the processing and the packaging.”
“All of those higher electricity costs turn into an added expense on your grocery store