AMERICANS ARE not famous for their love of vegetables. The staples of American cuisine are starchy, cheesy and heavy on meat. One vegetable, though, sneaks into everything: the tomato. Slices are tucked into burgers; canned ones become pizza sauce; further processing turns them into ketchup. Apart from the potato, of course, Americans eat more tomatoes than any other vegetable. Yet shoppers reaching for one at their grocery store may be experiencing a sense of déjà vu. Tomato prices are almost 25% higher than they were a year ago. It is eggs all over again.
Tomato prices are rising partly for idiosyncratic reasons. Some 90% of America’s imports of the vegetable come from Mexico. In the middle of 2025 President Donald Trump withdrew from the “Tomato Suspension Agreement”—a bilateral arrangement managing imports of Mexican tomatoes—and imposed a 17% levy on them. But prices may keep climbing. Tomatoes, like other fresh produce, require fertiliser, the price of which has rocketed since war broke out with Iran. Fuel costs are also starting to bite. How bad could the rise in grocery prices get?
To understand how the energy shock will affect grocery bills, consider each step of the supply chain. Begin with farmers, who rely on fossil fuels. Fertilisers, which typically use natural gas as a feedstock, account for as much as 40% of their input costs. Add to that the diesel needed to fuel their tractors. Producers of commodities like wheat and maize, however, have little control over their prices, which are determined by the balance of global supply and demand. And much of the expense for this year’s growing season—rent, equipment, seeds and even some fertiliser purchases—would have already been incurred by the time the war began. The energy shock might force some farmers into the red this year, but many will still make more money by planting what seed they have, rather than letting it go to waste. That means crop supply may not change much this season. The effect on farm prices might therefore not be felt in full until next season, when growers who suffered big losses this year may have packed it in.
Next in the grocery-supply chain is processing—at least for products like maize destined for cereal or cattle fated to become minced meat. Here markets tend to be more concentrated: there are just four major meatpacking firms and a handful of processed-food giants, among them Kraft and General Mills. Yet there are two reasons not to expect the energy shock to lead these companies to raise prices significantly. The first is that they rely less on oil for energy and more on electricity and natural gas, the prices for which have risen much more slowly in America. The second is that processed-food producers jacked up prices during the post-pandemic wave of inflation, resulting in a loss of customers to new entrants and retailers’ in-house brands. Meatpackers have also already had to pass on higher beef prices resulting from a cattle shortage following a drought.
At least for now, the biggest pressure on American grocery prices as a result of the Iran war may come from the next two stages of the supply chain: packaging and transport. A good deal of food packaging is made from plastic, which in turn is made from oil. Petrochemical feedstocks are now around two-fifths higher in price. Here the greatest impact will be seen not on the food shelves but in the home-care and beauty aisles, stacked with products packaged in thick plastic. Grocery-store shampoo prices were up by about 10% year over year at the end of March, according to NielsenIQ, a data provider.
Then there is transport, which accounts for a sixth of the food-supply chain’s total energy consumption but perhaps as much as half of its requirement for oil. According to the Department of Agriculture, 80-90% of America’s produce is transported on lorries. Costs are highest for foods like meat and dairy that must be kept refrigerated. With the price of diesel having soared, simply getting food onto store shelves has become materially more expensive.
Supermarkets, which tend to add only a small mark-up, usually pass on higher costs to shoppers. The result, then, is likely to be rising grocery bills, perhaps for some time. An early indication of the impact will come on May 12th, when the April figures for America’s consumer-price index are released. Food prices are already a third higher than they were before the pandemic.
Mr Trump will look for anyone but himself to blame. It is hard to think of a force that turns people against incumbent politicians more than anxiety at the supermarket, something that the president, who campaigned on bringing grocery prices down, knows all too well. Already he is pointing the finger at fertiliser producers and meatpackers, both of which have been the subject of antitrust investigations by the Department of Justice. Americans may find it hard to stomach his excuses. ■