Beer, paint and fries get pricier as Iran war squeezes supply chains

Six months into the U.S.-Iran war, the collapse of shipping through the Strait of Hormuz is rippling through global supply chains, pushing up prices on everyday items from beer and paint to milk and french fries. Companies across sectors are now passing rising commodity and freight costs on to consumers, with economists warning the worst may be yet to come.

From Oil Shock to Grocery Aisle

The Wall Street Journal News Corp ↘ 1.67% reported this week that firms including Boston Beer The Boston Beer Company, Inc. ↘ 1.14%, Sherwin-Williams The Sherwin-Williams Company ↘ 1.16%, International Paper ↘ 5.38%, and Unilever ↘ 2.85% have informed shareholders of recent or planned price increases to offset soaring input costs. Reuters reported in April that the effective closure of the Strait of Hormuz had tightened global chemicals supply, forcing Sherwin-Williams and others to hike prices.wsj+1

The inflationary pressure extends well beyond fuel. In Australia, milk prices rose 6.17 percent between February and June after the country's two largest supermarket chains raised store-brand milk prices by up to 12 percent in April, citing surging diesel, fertilizer, and packaging costs. Harry Murphy Cruise of Oxford Economics warned that "if businesses pass these increased expenses onto consumers, a temporary oil shock could evolve into a more widespread and persistent inflation issue".abc

A Humanitarian and Political Crisis

UN Secretary-General Antonio Guterres said Friday that trade through the Strait of Hormuz had "collapsed," energy markets had been "upended," and food and fertilizer prices had surged as supply chains buckle worldwide. He cited World Food Programme projections that as many as 45 million people could face acute food insecurity as a result.arabnews

In the United States, average gas prices have climbed back above $4 a gallon, and Brent crude rose to $90 a barrel on Wednesday as the U.S. and Iran carried out new strikes. A CNN poll found 65 percent of Americans believe President Trump's policies have worsened economic conditions, with approval on inflation falling to 25 percent.newstribune

No Quick Fix in Sight

Economists say the inflationary effects will persist regardless of how the conflict evolves. Diane Swonk, chief economist at KPMG, noted that spillover effects from the war — "most notably in terms of the fall harvest and food prices" — will extend well into 2027. Patrick Harker, a University of Pennsylvania professor and former Federal Reserve Bank of Philadelphia president, said the administration has "no good options" for bringing down prices before November's midterm elections.newstribune

Australia's Reserve Bank governor Michele Bullock acknowledged this week that "firms are looking to pass costs on," while noting headline inflation remained at 3.8 percent — well above target. In the UK, retailer Next warned of a £47 million cost hit from the war and said further price increases could follow if disruptions worsen.standard+1

"You can experience slowing inflation, meaning a slower pace of price increases," said UNSW economist Richard Holden. "But prices are unlikely to return to previous levels".abc