It's not just gas prices. How the Iran war is coming for your grocery bill.

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The Middle East war has driven up energy prices over the past couple of months, and Americans are feeling the pinch, with elevated oil prices spilling over into everyday costs.

Oil has shot up by more than 40% since the war started at the end of February, when it was closer to $65 a barrel.

This has led to sharp increases in gas prices in recent weeks, with gas rising over $4 per gallon and diesel well over $5 per gallon. However, gas prices aren’t the only everyday cost that could be creeping up.

Roughly one-third of the world’s fertilizer moves through the Strait of Hormuz, and the months-long closure has raised concerns about supply. As Iran declared the Strait completely open to commercial traffic on April 17, farmers are still warning of fertilizer shortages and price increases as the spring planting season gets underway.

In a survey of 5,700 farmers, the American Farm Bureau Federation found that fertilizer affordability is becoming an issue within the farming industry. About 70% of farmers report they cannot afford the fertilizer they need, attributing the challenge to rising fertilizer and fuel costs.

Fertilizer is one of the largest operating costs for farmers, according to USDA, Economic Research Service’s (ERS) Commodity Costs and Returns data, and energy prices play a key role in determining how much they pay for it.

Natural gas is a primary input in the production of nitrogen-based fertilizers like ammonia and urea, so when gas prices rise, production costs increase, and fertilizer prices can increase as well.

Higher oil prices can also drive prices up indirectly by increasing the cost of transporting and distributing fertilizer.

“Fertilizer sits upstream of the global food system, so when geopolitical disruptions hit energy markets or key shipping routes, the effects move into agriculture quickly,” said Hunter Swisher, CEO of Phospholutions, an agricultural technology company that focuses on creating more sustainable fertilizers.

“The impact is already playing out at the farm level,” Swisher said. “Growers are making real-time decisions this planting season based on higher and more volatile input costs.”

Agriculture Secretary Brooke Rollins said about 80% of farmers had already secured their fertilizer for this year’s crop last fall. She said efforts were underway to ensure the remaining farmers were being supported. Farmers told PBS recently that they’re concerned prices will stay elevated for a while.

“The reality is, we’re not breaking even,” one farmer told PBS. “We didn’t break even the last two years.”

All of this comes as the impacts of the U.S.-China trade war and the tariffs and retaliatory measures have cost the agricultural industry billions of dollars since 2018.

Higher operating costs for farmers and supply chain issues in the agricultural industry can indirectly affect food and grocery prices, though this likely won’t happen overnight.

In fact, the most recent CPI indicated that food prices were unchanged over the month. However, the food at home index did rise 1.9% over the 12 months ending in March, with the fruits and vegetables index increasing 4% — indicating that prices are indeed increasing and continued tensions could keep the momentum going.

Experts say it could be some time before Americans see the true impacts of the war on their grocery bills.

“This report shows just the initial impacts of the war, but more widespread impacts could be on the way in future reports,” said Angela Hanks, chief of policy programs at The Century Foundation and former Consumer Financial Protection Bureau official. “Potential shortages of petroleum, helium, and fertilizer threaten to drive higher prices on everything from dishwashers, to cars, to groceries.”

Shoppers are not at a total loss, though. There are ways to trim your food costs even as everyday goods become more expensive.

Buy in bulk: If you have a larger family or there are nonperishable items you tend to use on a regular basis, buying items in bulk can help you save money over time. However, be sure to calculate the price-per-unit (that’s the total number of units divided by the cost of the item) to ensure that you’re actually getting a good deal.
Use a rewards credit card: There are several rewards credit cards that offer cash back and bonuses for purchases made at supermarkets, as well as retailers, restaurants, gas stations, and more. Using a rewards card for grocery purchases can earn rewards on purchases you were planning to make anyway.
Swap name brands for generic: Name-brand products don’t always guarantee a better quality product; however, you can almost always count on a higher price tag. One easy way to cut grocery costs is to opt for a generic version of an item instead for a fraction of the cost.

It’s not just gas prices. How the Iran war is coming for your grocery bill.