Food prices rise to highest in three years on Iran war costs

GLOBAL food prices rose to their highest in more than three years as the Iran war disrupted supply chains, raising the prospect of higher bills for shoppers. 

The United Nations’ index of food-commodity prices gained 1.6 per cent in April, led by higher vegetable oil, meat and cereal prices, according to a Friday report. That’s 2.5 per cent higher than a year ago. 

Now in its third month, the Iran war has effectively shut the critical Strait of Hormuz, curbing flows of essential farm inputs such as diesel and fertiliser and boosting prices. Vegetable oils led the UN index higher, climbing 5.9 per cent from March to hit its highest since July 2022.

Vegetable oils “are experiencing stronger price increases, driven largely by higher oil prices, which are increasing demand for biofuels and putting additional pressure on vegetable oil markets,” said FAO chief economist Máximo Torero.

The index monitors raw commodity costs rather than retail prices, meaning there will still be a lag for an increase in farmgate prices to reach consumers.

Still, the increase from March’s level is the first sign that food inflation is likely to pick up, even as the US and Iran weigh a peace deal that would reopen the strait. 

The increase in the gauge — which tracks grains, sugar, meat, dairy and vegetable oil costs — marks the third consecutive month of gains, having risen for the first time in five months in February. 

The meat index hit a record high, climbing 1.2 per cent from March. The cereal price index rose by 0.8 per cent from March on weather concerns and expectations of reduced wheat plantings in 2026, as farmers consider sowing less fertiliser-intensive crops due to the conflict in Iran. 

Global growers are already warning of decreasing planting areas and crop yields, with the cost of diesel and fertilisers surging since the war began in February.

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