The Worst of Food Inflation Is Yet to Come, Industry Data Suggests
Food inflation accelerated final month, and a number of other knowledge factors now recommend the pattern could proceed nicely into the yr forward. US meals and beverage firm inflation surged 7.9% year-over-year in March, the most important soar in no less than 12 months.
The Kobeissi Letter famous that March’s improve was pushed largely by increased gas costs. The full impression of rising fertilizer and plastics prices has not but reached retailer cabinets.
Why Food Costs Are Climbing
Tomatoes posted the steepest jump at 102% year-over-year, with greens rising 90% and diesel climbing 88%. Overall, the headline studying accelerated by 373 foundation factors from February’s 4.2%.
Fertilizer is now a key concern. Urea, probably the most extensively used nitrogen fertilizer, has roughly doubled since February to about $900 per metric ton. Historically, urea has not traded this high since 2022.
“70% of respondents say fertilizer is so costly that they won’t be able to purchase all of the fertilizer they want,” the American Farm Bureau Federation’s survey revealed.
Farmers had been already strained earlier than that shock. Chapter 12 chapter filings rose 46% to 315 instances in 2025, in accordance to the American Farm Bureau Federation. It marked the third straight annual improve.
“Significant losses are anticipated throughout crop sectors for an additional yr, and plenty of livestock sectors are additionally tightening margins,” Economist Samantha Ayoub wrote. “A fourth consecutive yr of anticipated declines in farm earnings will proceed to pressure agriculture, inserting additional reliance on credit score choices which can be rising skinny.”
Hormuz Disruption Adds a Global Dimension
Meanwhile, the fertilizer shock stems from the disruption in the Strait of Hormuz, a chokepoint for main exporters. Besides the US, India and different agricultural economies face direct threat, with shortages affecting planting choices throughout the essential kharif season.
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Oilfield providers agency Baker Hughes assumes the Strait won’t absolutely reopen till the second half of 2026. CFO Ahmed Moghal instructed traders the corporate is working beneath the idea that the US-Iran battle will final no less than by way of June.
In a Dallas Fed survey, practically 80% of about 100 vitality executives count on the Strait to keep closed till August or later. Therefore, the shared view alerts an extended disruption.
Fertilizer costs are rising. Farm bankruptcies are climbing for a 3rd yr. With a key delivery lane doubtless to stay restricted, these forces are aligning for further grocery worth stress past March’s studying.
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