Why (almost) everything is going up in price due to the war in Iran
It’s no surprise that we’re having to shell out more at the petrol pumps as a result of the war in Iran and the squeeze on oil supplies.
But you may have noticed it’s not just fuel that’s been climbing in price since the end of February.
The Middle East conflict has served as a painful reminder of just how interconnected the global economy and supply chains have become – and how oil plays an even bigger role in everyday life than we might think.
This might be most obvious in the regular supermarket shop, with experts estimating the average UK household could be spending almost £340 a year more for food and drink.
And that’s not just because it’s more expensive to transport the products around the world due to the price of fuel.
Ammonia has gone up in price, due to the essential role natural gas plays in its production. That has made fertiliser more pricy, with a knock-on impact on crops and vegetables.
A byproduct of that process is CO2 which is itself used to produce and preserve items from pork and chicken to frozen food and beer.
Here are a few of other everyday items that could see a price hit from Iran.
Phones and laptops
Beyond oil and gas, another resource concentrated in the Persian Gulf is helium.
That’s not just a problem for people who like to speak in a high voice at parties: helium is an essential part of the manufacturing process of microchips.
The pressure on the supply chain will hit phones and laptops – while also causing problems for the building of certain medical devices that use chips to function.
Fast food
This week, McDonald’s announced it is set to raise prices due to the squeeze from the Iran war.
Lauren Shultz, the boss of the fast food giant’s UK arm, told BBC Radio 4’s Today programme: ‘We have long standing, strong relationships with our suppliers, who have given us a lot of cost certainty.
‘We will likely to see some prices go up but in a small disciplined way. It is where customers are willing to pay a little bit more.’
Cuddly toys
One of the more unexpected items to come under pressure from the situation in the Strait of Hormuz is the cuddly toy.
The materials that make these furry friends so huggable are synthetic fibres such as polyester and acrylic – which are directly derived from petroleum.
Ricardo Venegas, who owns toy manufacturer Aleni Brands, told the Associated Press: ‘I think this situation demonstrates how much oil permeates throughout our system, and we can’t get away from it.’
Condoms
Earlier this week, it was reported that the world’s top producer of condoms was hiking up prices by up to 30% in response to the Iran war.
Karex Bhd, which supplies leading brands like Durex and Trojan, said costs were rising for everything from synthetic rubber and nitrile used in manufacturing condoms to packaging materials and lubricants such as aluminium foils and silicone oil.
CEO Goh Miah Kiat said: ‘The situation is definitely very fragile, prices are high… We have no choice but to transfer the costs right now to the customers.’
Almost everything else you can think of
Petrochemicals, which are derived from oil and natural gas, are vital for the production of more than 6,000 everyday products, according to the US Department of Energy.
The list of items that use petrochemicals is dizzying – modern life simply couldn’t happen without them.
They’re essential for antihistamines, artificial limbs, ballpoint pens, candles, clothes, computer keyboards and monitors, curtains, glue, golf balls, hand lotion, insulation, luggage, parachutes, roofing, shampoo, solar panels, toothbrushes and bin bags.
Houses
One of the few places where prices have actually gone down is the one place many people don’t want to see it – housing.
The average UK house price fell by 0.5% in March, according to Halifax.
That was driven by the increase in mortgage rates due to the repercussions of the war in Iran, which in turn has hit demand for houses.
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