Price of your shopping ‘will be hiked up in very, very near future’ due to Iran war
It has been less than two weeks since US and Israeli missile strikes on Iran thrust the Middle East into a new era of chaos and uncertainty.
As death and devastation continue to spread across the region, the rest of the world is starting to feel a different kind of pain as a direct result.
The price of wholesale gas has increased by 67% since those initial strikes at the end of February, while oil prices have gone up by 35%.
That is immediately bad news for people who drive cars powered by a petrol or diesel engine, and fears are also growing for an increase in household energy bills further down the line if the crisis continues.
But those higher energy costs have a broader impact that will soon sting for regular people across the UK.
‘Energy is a very important ingredient,’ said Dr Muhammad Ali Nasir, Professor of Economics at Leeds University.
‘It’s like the blood of the economy, really, and the blood of the industry and services sector. Without energy, our economy can’t function.’
You might have read in recent days about Ofgem’s energy price cap, which will ensure household gas and electricity bills will not go up before July.
However, there is no such cap in place for businesses, meaning your local shop, pub and cafe could start feeling the pinch a lot sooner and be forced to pass that burden on to their customers.
Professor Nasir said: ‘If you take a supermarket, without naming one, they use energy in a big quantity.
‘And if now they are paying more on filling up at the pump, in just a matter of, I would say, a few days, they will have to take that into account to be sustainable as a business.
‘So as soon as their cost of business has gone up, that would be translated into prices very soon. So I won’t be surprised if, in the very, very near future, we’ll see that the impact has been felt.’
Higher energy costs also impact every aspect of a product’s journey to supermarket shelves, from manufacture to transportation to storage – particularly if it needs refrigeration.
That can lead to little choice other than hiking up the price.
And there’s more bad news from Professor Nasir. Even if the war in Iran somehow came to an abrupt end tomorrow, it’s unlikely to mean we escape the energy hit.
He said: ‘I think two weeks is a significant amount of time, and this is an energy shock, and it will have an impact.
‘Whatever it has caused, I think some uncertainty would remain, and that would affect the energy market.’
Professor Nasir added: ‘I don’t expect the prices of energy to go down to before this war level very soon. I hope I might be wrong, but I feel that they would remain elevated even there’s a cease fire.’
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