PALM BEACH COUNTY, Fla. — The rise in oil prices from the conflict in Iran is likely to trigger a shock to grocery prices later this year, researchers at Purdue University said.
WATCH BELOW: Professors Ken Foster and Bernhard Dalheimer explain how conflict in Iran could increase grocery prices
Ken Foster, a professor who authored the study with professor Bernhard Dalheimer, said rising oil prices are felt all through the supply chain, including transportation, packaging, processing, refrigeration and retail operations.
"There really is no low energy food in the grocery store," Foster said.
The cost shocks are estimated to be between 3% and 6% over the next 12 to 18 months and could start to take hold over the next couple of months.
"Distributors and processors along the way are trying to absorb those impacts into their margins rather than pass those on," Foster said.
"Come fall and the winter we might see these things to drive inflation or increase inflation but it depends how long oil prices will be at this level," Dalheimer said.
The researchers said the length of the conflict in Iran and the hopes for a lasting cease-fire can minimize the cost hikes.
The study reports if the conflict persists to keep driving up oil, the increases are likely not to come down quickly, creating a sticky shock.
"We wouldn’t expect and never do in any real way prices to fall dramatically after a shock," Foster said.
The full report from the Purdue University Farm Policy Study Group can be found here.
