5 Ways the Iran Conflict Will Add to Your Food Bill

You might think that the world’s central military conflict has nothing to do with the price of your breakfast cereal. I’m here to tell you that’s a dangerous trick.

Global chains are fragile, and the ongoing situation with Iran is already sending shockwaves through the commodity market. When the Middle East sneezes, your supermarket catches the flu.

It’s not just about the price of gas at the pump. We’re talking about the basic building blocks of how food is grown, packaged, and shipped.

If you’re wondering why your exit rate is about to rise again, here are five important reasons.

How conflict affects your wallet

1. The cost of goods is rising: The Strait of Hormuz is the world’s energy bottleneck. As military actions threaten the corridor, oil prices fluctuate.

Tractors don’t serve good purposes, and neither do trucks that deliver produce to your local grocery store. When crude oil prices rise, the diesel fines paid by trucking companies rise rapidly. Those extra shipping charges are passed on to you directly at the checkout counter.

2. Fertilizer suppresses: You can’t grow cheap food without fertilizer. Currently, most of the world’s fertilizer inputs, including ammonia and nitrogen, pass through the Gulf.

According to the Guardian, between a quarter and a third of global trade in these commodities depends on that difficulty. If farmers have to pay an initial fee to fertilize their crops, the yield decreases and the prices of basic items such as bread, pasta and potatoes will inevitably increase.

3. Transport insurance covers: No one wants to send a large cargo ship into a conflict zone without ironclad insurance. The problem is that marine insurance companies are raising their rates too much. Some industry experts see war risk coverage for ships operating in the Gulf jump at 50% to 100%.

Importers will not bear those costs. They will bake it into most anything inside those shipping containers, including imported food.

4. Ships travel long distances: When certain routes become too dangerous, cargo ships are forced to reroute. Taking a route adds weeks to the trip. In the agricultural sector, time is money.

Longer routes mean more fuel burn, higher wages for workers, and a greater risk of spoilage of perishable goods. All of these inefficiencies destroy profits, forcing food distributors to raise prices just to break even.

5. Petroleum-based packaging is becoming more expensive: Go down any aisle and look at how your food is packaged. Plastic berry shells, shrink-wrap for meat, and heavy bags of rice all rely on petroleum.

As oil prices react to tensions in the Middle East, the cost of producing plastic bags is rising. You just don’t pay more for the food itself. You pay a premium for the plastic container we carry.

How to protect your budget

I know this sounds bad, but you don’t have to accept high debts. Start converting your menu to basic, shelf-stable items that don’t rely on overseas shipping or heavy plastic packaging.

Buy in bulk where you can, and lean on historically inflation-resistant items. You need to rethink how you shop, from meal planning to knowing the best times to hit the store.

For a great start, check out our inflation-proof grocery list to see what you should be packing in your cart right now to weather the storm.