Groceries will be much more expensive by Christmas: Rabobank
The war in Iran has so far had only a limited effect on Dutch inflation. But Rabobank economists warn that the long-term effects will be much more severe. Groceries could be around 7 percent more expensive at the end of this year, compared to the start of it, NOS reports.
The United States and Israel started the war in Iran late in February. Since then, shipping through the Strait of Hormuz, an important transport route for oil and gas, has been severely restricted. As a result, oil prices, and consequently those of petrol and diesel, have skyrocketed. Yesterday, the recommended price for a liter of petrol topped €2.60 for the first time ever.
Earlier this week, Statistics Netherlands (CBS) reported that inflation rose to 2.8 percent in April. But if you look only at energy, the price increases are much more significant. The price for energy, including motor fuels, was 7.8 percent higher in April than in the same month last year.
Those prices will slowly but surely trickle down to the rest of the economy, economists have warned. For example, Air France-KLM reported this week that it was spending nearly €2 billion more on kerosene this year than last year, and will hike its ticket prices again in the second half of 2026.
ING also warned earlier this week that the food industry, which is highly dependent on energy and natural gas, in particular, will start feeling the high energy prices later this year. Many food industry companies have taken out fixed-rate energy contracts after the previous energy crisis, but they’ll start reaching the end of their terms in the coming months and will have to be renewed at much higher rates.
That will make groceries significantly more expensive as 2027 approaches, the economists at Rabobank agreed in a report published on Friday. Even if oil tankers start sailing through the Strait of Hormuz within a month, the domino effect will continue.
“Here’s the thing: producing food requires a lot of energy,” said Rabobank economist Cyrille Filott. “Bread, for example. Gas is used to bake bread. And making flour also requires a lot of energy.”
Transporting food from farms to supermarkets also takes a lot of diesel. And oil use goes beyond motor fuels. “Oil is also needed for plastic used to package food,” Filott said. “There are a great many steps in the food production process. By the time all those prices have been raised at every step, it will be Christmas.”
