The Iran war’s closure of the Strait of Hormuz and the U.S. Navy blockade of Iranian oil exports are sending energy costs through every layer of the consumer economy, from the gas pump to the grocery aisle, and threatening to push tens of millions of people into hunger worldwide.
Across the United States, gasoline prices have surged to their highest level since 2022. AAA reported a national average of $4.30 a gallon on Thursday, up from $2.98 before the U.S. and Israel attacked Iran on February 28. Diesel has followed a similar trajectory, reaching an average of nearly $5.50 a gallon — up from $3.76 before the war — and the rising cost of moving goods is now visible in surcharges attached to everyday services.
The U.S. Postal Service implemented a temporary 8% charge on some of its services, including Priority Mail, to help offset transportation costs. Amazon added a 3.5% fuel and logistics surcharge on third-party sellers using its platform. Peter Zaleski, a professor of economics at Villanova University, warned that diesel is the fuel to watch for consumer-goods inflation. “Diesel’s the one that you want to watch out for for prices of consumer goods,” he said.
Air travelers are feeling the squeeze from both higher fares and new fees. Jet fuel, one of the largest expenses for carriers, jumped to $209 a barrel in early April before easing last week to roughly $179 — still well above the roughly $99 at the end of February. Delta, United, American, and Southwest have all raised checked baggage fees. United is expanding a “pay for what you want” model from economy to premium cabins, charging separately for options such as seat selection. American is adding fees for seat assignments in basic economy, even for elite-tier loyalty members. Outside the U.S., carriers in Asia and Europe have added or raised fuel surcharges, in some cases adding hundreds of dollars to long-haul tickets, and the Lufthansa Group plans to cancel about 20,000 flights across its network over the next six months.
The impact is spreading to store shelves. Procter & Gamble, the maker of Crest toothpaste, Tide detergent, and Charmin toilet paper, estimated last week that the war could cause a $1 billion hit to profits during its next fiscal year if Brent crude were to stay around $100 a barrel. Andre Schulten, P&G’s chief financial officer, told reporters on April 24 that many of the company’s products and packaging are made of resin or other petroleum-based materials, and that P&G may have to pass some of the costs to shoppers. London-based Unilever, which makes Dove soap and Hellmann’s mayonnaise, plans to raise prices about 2% to 3% in “small doses,” CFO Srinivas Phatak said in an earnings call on Thursday.
Grocery prices have not yet risen in government figures, but economists expect them to follow. Fuel accounts for roughly 15% to 30% of the total cost of food, according to the Independent Grocers Alliance, and about 30% of the world’s fertilizer shipments typically pass through the Strait of Hormuz. Ken Foster, a professor of agricultural economics at Purdue University, said there is typically a 3- to 6-month lag between an energy price shock and an increase in retail food prices, and up to a year for packaged foods with a longer shelf life.
The humanitarian dimension is already coming into focus. The U.N. World Food Program estimates that 45 million additional people — the majority in Asia and Africa — could tip into hunger if the war does not ease by the middle of this year, bringing the global total of people facing food insecurity to 363 million, the highest on record. “Delays and higher transport costs push up food prices, and families who spend 50% to 70% of their income on food are the first to go without,” Corinne Fleischer, the program’s supply chain director, said in a statement.