The impact of the recent war in the Middle east will not be completely seen in food prices for a number of months, according to the Economic and Social Research Institute’s (ESRI) Quarterly Economic Commentary Summer 2026 report.

The report shows that spikes in food inflation tend to follow price spikes in motor fuel; however, there is evidence of a time lag with the full effects on supermarket shelves not seen until a period of eight to 10 months later.

This suggests that the impact of the war on food inflation in Ireland is yet to be felt.

The ERSI has also found that prices for food and non-alcoholic beverages in the Ireland and the UK often move together, particularly during periods of higher inflation.

Current industry forecasts estimate UK food price growth of 9% for 2026.

The war's impact on food prices will come at both ends of the production process and will affect both domestic production and imports, the ERSI has said.

In terms of domestic production, higher green diesel prices and fertiliser costs are already increasing costs for farmers.

For domestic final goods, higher prices for white diesel will increase the costs of distribution over the coming months.

These effects also apply to imported final goods, however they will be further adversely affected by increased international freight and insurance prices, according to the report.

Key inputs

The closure of the Strait of Hormuz has impacted three key inputs in the agricultural sector including fertiliser, feed and fuel.

The report shows that wholesale feed and fertiliser prices have risen sharply in Ireland since the start of the war.

In the case of feed, this increase is sharper and larger than the increase in 2022, while the increase for fertiliser is more modest, the ERSI has said.

However, the timing of the price increase is more impactful for fertiliser, with CSO data outlining that over 40% of fertiliser is usually sold in the period from April to June, when the highest spikes in fertiliser were seen.

In contrast, seed prices have not been significantly affected by the war to date.

Green diesel

Prices for green diesel, white diesel and petrol usually move in a similar way.

However, green diesel prices have risen sharply in the months since the war began, with year-on-year growth of 45% seen in April.

In addition to domestic costs, international freight prices have increased since the outset of the war.

Moreover, insurance costs for shipping have risen due to the blocking of the Strait and the uncertainty associated with the war.

Outlook

In the last 18 months, food price inflation has been in part due to increases in specific food items, such as beef and butter, according to the report.

Therefore, consumers can choose to substitute these products for more affordable ones.

However, the ERSI projects that increases in food prices in 2026 might be more broad, reducing the possibility of substitution.