A delayed food inflation shock follows the fertilizer price surge

The shipping bottleneck

Around 80 percent of vessel transit through the Strait of Hormuz remained disrupted following the onset of the Middle East conflict. This reduction in maritime traffic restricted the global supply of energy products and caused an immediate repricing of agricultural inputs. The prices of refined products and fertilizer inputs such as urea rose by 80 percent.

The transmission mechanism

The Asian Development Bank notes that natural gas serves as the primary feedstock for nitrogen fertilizers such as urea and ammonia. Consequently, the surge in energy prices directly inflated the cost of crop nutrients. These higher input costs typically take three to six months to pass through to retail food prices.

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Source institutions：ASEAN+3 Macroeconomic Research Office

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