Fertiliser shortages caused by the Iran conflict have driven up costs for UK farmers by up to 70%, with one of the country's most powerful property and farming companies warning of a "dramatic" impact on food prices globally next year. Separate polling shows four in five UK consumers are worried about the conflict pushing food costs higher.
The mechanic: gas, ammonia, fertiliser, food
Most synthetic nitrogen fertiliser is made from ammonia, and ammonia production is overwhelmingly dependent on natural gas. When wholesale gas prices rise — as they have done since late February 2026 in the wake of the Iran conflict — the cost of producing ammonia rises with them, and so does the price farmers pay for fertiliser. The 70% increase reported in the Thursday newspaper round-up of 7 May 2026 reflects that pass-through.
From farm gate to checkout
Higher fertiliser costs feed into food prices through three channels. First, lower yields where farmers cut application rates to manage cost. Second, higher production costs which farmers must pass on. Third, market dynamics where global supply is tightened and benchmarks rise. The Bank of England's April Monetary Policy Report sets out scenarios in which CPI inflation peaks above 6% in early 2027 if oil and gas prices stay elevated. UK Finance's May 2026 economic review echoes that range, noting the high-price scenario assumes oil at $130 per barrel for the next year.
What the data shows so far
| Indicator | Reading | Source |
|---|---|---|
| UK CPI (March 2026) | 3.3% | ONS |
| UK CPI (February 2026) | 3.0% | ONS |
| Food and non-alc beverages CPI (Jan) | 3.6% | ONS |
| Households reporting cost of living rising vs prior month (March) | 67% | ONS |
| BoE high-energy-price scenario peak CPI | ~6%+ early 2027 | BoE MPR April 2026 |
What you can do as a household
The practical steps are familiar from the 2022–23 cost-of-living squeeze. Compare grocery prices using the ONS basket monitoring tools and supermarket-tracked inflation indices. Check whether you are eligible for Pension Credit, Universal Credit, the Warm Home Discount or local council hardship support. For energy specifically, the Ofgem price cap for the second quarter of 2026 sets the unit-rate ceiling for standard variable tariffs.
What businesses are watching
For SMEs in food production, retail and hospitality, the immediate pressures are working capital and pricing power. Stronger credit management, clear customer payment terms and tighter margin controls become more important as input costs rise. Insolvency practitioners have noted continued elevated activity into May 2026.
Disclaimer
This article is general information about cost-of-living and inflation developments, not financial advice. Households facing financial difficulty can contact StepChange, Citizens Advice or the National Debtline for free, impartial help.
Sources
- Office for National Statistics — Consumer price inflation, UK: March 2026
- Bank of England — Monetary Policy Report, April 2026
- UK Finance — Monthly Economic Review, May 2026
- Sharecast / Hargreaves Lansdown — Newspaper round-ups, 6–7 May 2026
Feature image: Photo by Pauline Bernfeld on Unsplash.
