Impact of Iran conflict on consumer prices
- The rise in energy costs due to the conflict in Iran is expected to directly impact consumption prices.
- An increase of 4 to 5% is estimated by the Consumer Observatory at UFC Que Choisir.
- The first affected products will be dairy and fresh products, followed by hygiene and beauty products.
The director of the Consumer Observatory at UFC Que Choisir estimates a 4 to 5% increase in shelf prices in the coming months, following the war in Iran. The increase will likely be “4 to 5% in the coming months in shelf prices,” but “spread over several months,” said Grégory Caret in an interview with RMC.
Industry and major retailers sign an agreement on March 1st, setting prices for the whole year, but “there are still mandatory review clauses,” he points out. If energy and fertilizer prices soar, “negotiations must be reopened, and it must be reflected in prices,” he adds.
In the short term, the first affected products will be “products with the fastest turnover, meaning those with short expiration dates: dairy products, fresh products, yogurts, etc.,” according to the director of the Consumer Observatory.
French dairy giant Lactalis (brands Président, Lactel, Galbani) announced that it will have to “pass on” the impact of the Middle East war to its consumer prices, while trying to “minimize according to product categories.”
Trade-offs in households?
Next, other sections will be affected: “Everything related to hygiene, beauty, due to the presence of hydrocarbons in these products, packaging, and even in the manufacturing of these products,” Gregory Caret indicated. He assures, however, that the increase “will not be of the same magnitude” as that seen following the war in Ukraine in 2022-2023, which was “20-25% increase in a little over a year.”
Regarding the fuel increase, very significant since the start of the Middle East war in late February but somewhat moderated in recent days with the announcement of a ceasefire and the reopening of the Strait of Hormuz, it is anticipated that the French will have to make “trade-offs” and will have to “give up consuming to prioritize the essentials: transportation, heating energy, food.”
