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Personal Finance

13 Everyday Items Getting More Expensive Because of the Iran War

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Costs are creeping up — and not just at the gas pump. A growing list of everyday expenses, from groceries to airline baggage fees, is feeling the ripple effects of tensions tied to the Iran war.

That’s because energy sits at the center of the global economy. When it gets more expensive, like it has due to this conflict in the Middle East, so do goods and services that depend on moving, shipping or production. That's... almost everything.

“What began as a disruption in a key energy corridor is now feeding through the entire global economy,” United Nations' Trade and Development arm wrote in a recent report.

Here’s a look at some everyday costs that are already rising in the U.S. — or could soon.

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Gas

It’s been about a month since the first U.S.-Israeli strikes on Iran, and filling up your tank is noticeably more expensive. As of press time, the national average for a gallon of regular gasoline was about $4.12, according to AAA, up sharply from just over $3 a month ago. Prices crossed the $4 threshold on March 31, marking the first time in four years that the national average has topped that level.

But prices aren’t rising uniformly across the country. Varying tax rates, distribution costs and the cost of turning oil into gas mean some drivers are paying a lot more than others. For example, a gallon of regular gas averaged near $6 a gallon in California on Tuesday — the highest in the nation — while it cost $3.35 in Oklahoma.

Oil

Much of the pressure on gas prices traces back to the closure of the Strait of Hormuz, a critical shipping route off Iran’s southern coast that carries about 20% of the world’s oil. The U.S. produces most of the oil used domestically for gas, but crude is priced on a global market, meaning supply disruptions can drive prices higher.

Experts say it could take weeks or months before the Strait fully reopens and global production stabilizes. Even then, prices aren’t expected to fall quickly, meaning drivers are likely to face continued volatility.

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Sugar, dairy and fruit

The price of food was already up 3% year over year in February. But the Iran war is adding new pressures that could make grocery bills climb even higher.

The United Nations' Food and Agriculture Organization reported that its global food price index rose for the second consecutive month in March after several months of declines. “Energy-related pressures” drove price increases across a range of goods, with sugar and vegetable oil seeing the largest jumps, according to the report.

Higher oil prices are driving up the cost of transporting food, especially for items that require refrigeration or long-distance shipping. That’s because rising oil prices are pushing up the cost of diesel, which fuels farm equipment, as well as the semi-trucks, trains and cargo ships that move food across the country. Diesel prices have climbed even faster than gasoline, rising nearly 50% since the start of the war, according to AAA data. The national average was well above $5 per gallon on Monday.

Perishable items, such as fresh fruits, vegetables and dairy, are especially vulnerable. These products need to be kept cold during transport, and higher energy prices make refrigeration more costly.

Fertilizer and plastic

Fertilizer costs are also being pushed higher, as the closure of the strait disrupts a key route for the global fertilizer trade. While the U.S. produces much of the fertilizer it uses, prices are set on a global market (similarly to the gas you use to fill up your car).

Prices for urea, a key fertilizer ingredient, have already risen more than 25% at the port of New Orleans since late February, according to analysis from the Carnegie Endowment for International Peace. Higher fertilizer costs make it more expensive for farmers to grow crops — a pressure consumers won't feel right away but can translate into more expensive groceries down the line.

Even packaging materials like plastic (which come from petrochemicals) are becoming more expensive, adding to the overall cost of getting food safely on the shelves. This combination of factors means grocery bills are likely to keep creeping higher in the months ahead.

Airline bag fees

Jet fuel prices have surged alongside crude oil since the start of the Iran war — in some cases doubling compared to pre-war levels — putting immediate pressure on one of airlines’ biggest operating costs.

Now, airlines are starting to pass those costs on to travelers. Several airlines have already raised baggage fees, a common way to offset rising expenses without increasing base fares.

JetBlue was among the first major U.S. carriers to raise its baggage fees, with increases ranging from $4 to around $9. Most JetBlue travelers now pay at least $39 for a first checked bag on off-peak days and about $49 during busier travel periods — up from roughly $35 and $40, respectively.

United Airlines followed and increased the cost of checked bags for tickets purchased after April 3, adding $10 to the first and second checked bags and as much as $50 for additional bags.

Delta also announced on Tuesday a $10 increase for a passenger's first and second checked bag, bringing the price up to $45 and $55, respectively. These changes apply to tickets purchased on or after April 8.

Plane tickets

Some airlines are also reviving or raising fuel surcharges — extra fees tacked onto tickets to help offset rising jet fuel costs. Hong Kong-based Cathay Pacific, for example, announced on March 26 that it was raising fuel surcharges on all flights by 34%.

“Fuel surcharge is an important mechanism to mitigate and recover a portion of our incremental fuel costs,” the company said in a statement, adding that it would “review and revise” the surcharge every two weeks to reflect volatile fuel prices.

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Shipping packages

Getting packages delivered could cost more soon, too. As fuel prices rise, shipping companies are increasingly adding or adjusting fuel surcharges to offset higher transportation costs.

The U.S. Postal Service said on March 25 that it plans to add a temporary 8% surcharge on services including Priority Mail, Ground Advantage and Parcel Select shipping. Pending approval from the Postal Regulatory Commission, the surcharge would take effect from April 26 to Jan. 17.

The agency said that the temporary price increase “is consistent with industry practices.” Private carriers like FedEx and UPS have long used fuel surcharges — and both have raised those fees as fuel costs climb, according to the Wall Street Journal.

Amazon orders

Amazon is also passing along higher costs. The company recently announced a 3.5% fuel and logistics surcharge on fulfillment fees it charges third-party sellers in the U.S. and Canada. The price hike is set to take effect on April 17.

“Elevated costs in fuel and logistics have increased the cost of operating across the industry,” Amazon said in its announcement to sellers. “We have absorbed these increased costs so far. However, similar to other major carriers, when costs remain elevated, we implement temporary surcharges on our fulfillment fees to recover a portion of the actual cost increases we are experiencing.”

Mortgage rates

The war is also starting to push up the cost of buying a home.

Mortgage rates have climbed in recent weeks as headlines about oil prices fuel broader inflation concerns. Just days before the war began, the average rate on a 30-year fixed mortgage had dipped below 6% for the first time since September 2022. Since then, rates have climbed back up to about 6.4%, according to Freddie Mac.

Mortgage rates tend to track the yield on U.S. Treasury bonds, which rise when investors expect higher inflation. As those yields increase, borrowing costs for homebuyers move higher as well. While gas prices can be volatile, mortgage rates tend to be stickier — rising with inflation expectations and often taking longer to come back down.

Other borrowing costs

The effects could extend beyond mortgage rates. The Federal Reserve has signaled it will keep interest rates on hold for now as it evaluates the economic impact of the war. Recent comments from Fed Chair Jerome Powell suggest policymakers are taking a wait-and-see approach, noting that the central bank is focused on looking beyond short-term energy swings and keeping its attention on inflation and the labor market.

The next Fed meeting is set for April 28 and 29.

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