Any hopes of a swift resolution to the conflict have long since faded, and the Islamic regime in Tehran has proven highly adept at putting a spoke in the wheel of the international oil trade with its effective naval blockade of the Straits of Hormuz.
As such, and despite Keir Starmer’s best efforts to keep the UK out of the conflict, the war’s repercussions are being felt by British purse strings as the price of oil soars.
The domestic food industry is highly dependent on fuel, but also on urea - a key component of synthetic fertiliser.
Accordingly, the conflict has led to a 33% contraction in the global fertiliser supply chain, giving farmers yet another considerable headache.
Unsurprisingly, and rather disappointingly, the expected drop in inflation signalled by the Bank of England earlier this year has now been shelved – and food prices are set to rise again as manufacturers attempt to absorb market pressures.
NFU sounds the alarm
Over the weekend, the National Farmers’ Union (NFU) effectively confirmed what had been mooted since the early stages of the conflict: namely that UK food prices were likely to rise as a direct result of the joint US-Israeli campaign against Iran.
The worsening tensions in the Straits of Hormuz had made this almost a formality, and the NFU cited rising costs for fuel and fertiliser as key factors that would impact British food manufacturers.
So what will this mean for both consumers and producers? Less money in everyone’s pockets, sadly, as businesses try to absorb the economic shockwave without making everyday prices unaffordable.
The Bank of England’s original prognosis for the second half of 2026 had been positive, predicting that inflation would fall to 2.5% – the closest to the Government’s 2% target it has been for some time.
But Britons now appear to be in for another rocky spell, as James Napier, senior underwriter for Atradius UK in the food and agriculture team, explains: “The impact on the cost of living and grocery prices in particular will be significant, and for food and agriculture this is very bad timing as we are heading into spring planting season with skyrocketing fuel and fertiliser costs.
“One-third of global fertiliser trade passes through the Strait of Hormuz, meaning its closure will in turn lead to higher costs for vegetables, dairy, bread and cereals. Global shipping and freight disruption will also impact prices, with the UK still importing 80% of its fruit and over half of its vegetables.”
Matching Napier’s concerns, former chief executive of the FDF Ian Wright urges the UK Government to introduce targeted support measures: “Food prices will rise by around 5% over the next three months. These impact a market already beset by weather-related price rises and shortages.
“By September we may see further increases (up to 7-8%) and shortages. There are few meaningful levers government can – or should – pull in such a constrained position for public expenditure.”
Striking a more optimistic tone, FDEA chairman Barney Mauleverer says that he expects “only a relatively modest impact on grocery prices and the cost of living overall”.
Spotlighting the UK’s resilience, he adds: “The UK benefits from highly diverse sourcing networks across dozens of countries and a robust domestic production base that has repeatedly demonstrated strong resilience in recent global shocks.
“Much will depend on the longevity of the conflict, but short-term pressures should ease relatively quickly as supply chains adapt and alternative suppliers come online. Targeted government support for businesses and consumers would, of course, be very welcome.”
Diversification and resilience
So what can businesses do in unprecedented times like these? Over the past decade British manufacturers have faced their fair share of what once might have been considered era-defining events.
They have felt the full force of the biggest economic setback since the 2008 financial crisis, swiftly followed by a steep inflationary shock and the first armed conflict on the European mainland since the Second World War.
Diversifying supply chains will be crucial. With up to a third of the world’s fuel and fertiliser traffic running through one of its most politically unstable regions, permanent and viable contingencies must be put in place to reduce market instability.
It is easier said than done, but it is vital that Britain becomes more self-sufficient. It remains too reliant on foreign imports, leaving it vulnerable to international crises such as the Iran war.
“The resiliency of the UK’s food supply chain has been repeatedly called into question in recent years, with our reliance on imports, sensitivity to extreme weather events and global instability all exposing how fragile the food supply chain is,” Napier says.
“The current crisis is another test of the system and may expose its flaws further. The extent to which the Government is willing to intervene and protect businesses will be crucial in how the supply chain weathers this storm.”
Disagreeing with Napier’s assessment of the British food supply chain, Mauleverer believes that the conflict may even present an opportunity: “The UK food supply chain is highly resilient, having weathered recent global challenges – I’m confident it will remain robust.
“For exporters like our members, adaptability is key – we’re already seeing opportunities to supply reliable, high quality products to international buyers facing their own disruptions. This crisis may accelerate innovation towards sustainability, strengthening our industry long term.”
He urges businesses to prioritise “supply chain diversification, adopt alternative sources and invest in efficiency technologies like renewable energy and smart farming” to better mitigate future risks, as well as building up stockpiles and increasing logistical flexibility.
In the short term, price rises for the consumer will be inevitable, and Wright recognises that “finding long-term alternative sources of supply which avoid the Gulf is the only real option” should the conflict persist. But that will be a long and arduous undertaking.
Criticising the Government’s accusations of price gouging levelled at farmers and food manufacturers, Wright adds: “This is divisive nonsense and shows how little they understand how our industry works.”
Ultimately, only time will tell how much the Iran War will impact food prices at home – but one thing is certain: the UK must diversify and strengthen its domestic supply chain if it wishes to be less vulnerable to the seemingly constant international turmoil of the 2020s.
