Fuel and airfare costs surge from Iran war as grocery prices lag

Seven months into the U.S. war with Iran, American households are feeling the cost at the pump and in the air more than on store shelves, according to the Associated Press, though the strain is building as the midterms approach.

Snapshot

The Associated Press reports that fuel and airfare costs have risen sharply since the war began, while grocery and retail prices have climbed more modestly as companies absorb part of the hit. Moody's Analytics chief economist Mark Zandi estimated the war has cost the average household nearly $2,000 so far, with the energy portion growing by $50 a week at current prices.

Key points

• Fuel: AAA reported gasoline up 45% and diesel up 68% from prewar levels as of Friday, with this October marking the first time average regular gas has topped $4 a gallon, per the AP.
• Air travel: Jet fuel costs and ticket prices have risen, with airfares up about 22% year-over-year in September; United Airlines has pulled some December flights and warned of further 2027 cuts.
• Groceries: USDA now expects a 2.4% rise in grocery prices this year, and Cornell economist Chris Barrett said he was surprised prices haven't climbed faster given higher diesel, fertilizer and refrigeration costs.
• Shipping: Producer prices for trucking and water freight each rose 19.3% year-over-year in September, and AFS Logistics projects record parcel costs and the highest truckload rates since early 2022 this quarter.

Quick take

For households already weighing years of inflation, the gap between what businesses are absorbing and what they'll eventually pass on matters. The AP's reporting suggests fuel-driven costs are still working their way through supply chains, meaning the full price tag for consumers may not be visible yet.

Read the full story: military.com