Iran ceasefire: is it already too late to stop higher food prices?

If your weekly shop has been creeping up lately, you’re not imagining it. Global events can have a surprisingly direct impact on what we pay for everyday essentials in the UK — as seen in the last few years following the Ukraine conflict and rising inflation. Now, the latest conflict involving Iran is already starting to ripple through fuel costs. Could this be the next cause for food prices to rise?

Anyone putting fuel in their car in recent weeks will have felt the pinch at the tills. Since the US and Israel first launched strikes on Iran on 24 February, petrol prices have risen by 24.9p per litre, while diesel has surged by 48.2p, an increase of nearly 34%. Even the two-week provisional ceasefire announced between the US and Iran announced last Tuesday has done little to reduce the pressure at the pumps. Although motorists witnessed the effects of the conflict almost immediately, the impact on food prices is much harder to quantify – and may not be felt for some time. As negotiations between the two countries take place, we look at what the experts are predicting and the likely outcome for your weekly shop.

What’s happening in the Middle East?

The closure of the Strait of Hormuz by Iranian forces on 2 March significantly reduced the global supply of oil and gas. Although UK imports from the Middle East are low at less than 3% of total supply, escalating tensions in the region caused red diesel (gas oil) prices, which are determined by international markets, to surge by more than 60%.

Another consequence of the war is the disruption to shipments of fertiliser, as around one-third of the world’s supply travels through the strait. Producers and wholesalers experienced shortages that led to a 40% hike in prices.

Why might this affect food costs?

Food manufacturing requires a significant amount of energy, whether for high-temperature processing – such as heating greenhouses or drying crops – refrigeration or haulage. The industry is heavily reliant on fossil fuels so when the international markets for oil and gas are affected, producers can expect a knock-on effect. Although medium and larger-sized businesses will have fixed tariffs with their suppliers in advance, small businesses that buy energy at on-the-spot prices felt the impact of the war immediately.

Farmers were among the first to be affected. Low-taxed red diesel is used to power tractors, combine harvesters and other agricultural machinery. UK consumption is high in spring when the soil is prepared for planting, so price increases and shortages during this period may affect farmers’ ability to operate.

"On the Friday before the first strikes, the price was around 62 to 64p per litre," says Charles Goadby, a dairy and arable farmer from Warwickshire. ‘Now it’s between £1.30 and £1.50, if you can get it’. Goadby estimates he has enough diesel to last for about two weeks. Added to this is the spike in fertiliser prices. Goadby bought a lot of his fertiliser last June at around £320 per tonne. Since then, prices have risen to £550. "A third of farmers didn’t make any profit last year. They’ll be asking whether it’s worth spending money on fertiliser when their stocks run out."

What are the experts forecasting will happen?

On 1 April, the Food & Drink Federation predicted that food inflation could rise at more than triple the rate it forecast in September, from 3% to 9%. This new rate was based on the Strait of Hormuz reopening within two to three weeks and with oil and gas facilities returning to normal within a year. The FDF’s chief economist Dr Liliana Danila explained that manufacturers are still cushioned by fixed-term energy contracts. When these come to an end, "this will push food prices up for consumers, albeit with a six to 12-month delay".

A shortage of fertiliser now could also affect yields later in the year. "A relatively brief closure could disrupt an entire growing season, with food security consequences that persist long after the strait reopens," according to researchers at the Kiel Institute.

When will effects begin?

Although suppliers are already beginning to feel the effects of the conflict, food shoppers have yet to see the repercussions at the tills. "Existing contracts between supermarkets, farmers and suppliers provide some price stability, limiting any immediate impact on shoppers," explains Andrew Opie of the British Retail Consortium.

Food inflation for the 12 months to February fell to 3.3%, from 3.6% in January, the lowest rate since March 2025, when it was 3%. In 2022, when Russia invaded Ukraine, food inflation stood at 10.9%, rising to 14.6% in 2023, so the outlook for 2026 is far less alarming. "Inflation will rise," says Opie, "although there are no indications it will reach the peaks of the last spike in April 2023."

Availability is also unlikely to be affected, according to Opie, since 90% of food sold here comes from the UK or EU.

What else is causing prices to change?

The instability in the Middle East comes at a time when many businesses have been hit by increases in standing charges which came into force at the start of April. The British Tomato Growers Association had called on the government to help with surging energy bills in January before the conflict began. Without support, the BTGA said that "growers will have no choice but to pass these costs on or stop production altogether."

For households, a raft of measures introduced on 1 April to help with the cost of living has reduced the pressure on the weekly budget. These include cutting energy bills by an average £117 a year until the end of June, and an extension to the cut in fuel duty until September.

What might shoppers notice next?

UK growers have warned that surging energy prices could lead to shortages of domestic tomatoes, cucumbers, peppers and aubergines. These crops are raised in heated greenhouses and are set to become even more costly to grow when the energy price cap resets in July. Meanwhile some manufacturers, such as the food company Princes, which makes tinned tuna under its own name, as well as Napolina pasta, have warned retailers they’ll need to raise their prices because of "unprecedented cost pressures" stemming from the war. It’s not clear if the uplift will be passed on to shoppers as negotiations with the supermarkets are ongoing.

One thing the experts are in agreement on is that the shortfall of diesel and fertiliser will continue for some time. Even with a ceasefire in place, analysts predict it may take weeks or even months before order is restored, while repairs to refineries damaged during the conflict could be measured in years. This means that the cost of driving to your nearest supermarket isn’t likely to come down any time soon, and could be followed by inflating food costs. While prices won’t rise overnight, any easing in costs is likely to be gradual rather than immediate.