U.S. shoppers should brace for impact of higher oil prices, experts say

The recent conflict in Iran has led to a significant increase in global oil prices, impacting consumers in the U.S. in various ways. Not only are Americans feeling the pinch at the gas pump, but they are also likely to see the effects of rising oil prices in stores and online.

Since the conflict closed the critical waterway of the Strait of Hormuz, global oil prices have surged by more than 40%. This surge is affecting every link in the U.S. supply chain, from cargo ships crossing the ocean to delivery vans transporting goods. As a result, the cost of transporting goods is on the rise, and consumers may start to see these increased costs reflected in the prices of products.

According to Diane Swonk, chief economist at KPMG, the rising costs are likely to be passed along to consumers, leading to higher prices for goods. She also mentioned that if costs are not passed along, it could result in a squeeze on profit margins and employment.

The average price of a barrel of Brent crude, the international standard, has skyrocketed to $108.84, up from around $70 before the conflict began. As of March 20, the average U.S. gas price had reached $3.92 per gallon, a significant increase from previous weeks.

Bernard Yaros, lead U.S. economist at Oxford Economics, predicts that headline inflation will rise sharply in the coming months, mainly due to gasoline prices. He also expects inflation to remain strong as disruptions push up food prices and other items.

Retailers are also feeling the impact of higher energy prices. Stew Leonard, owner of a grocery chain on the East Coast, expressed concern about the impact on suppliers but is holding off on raising prices for now. However, not all retailers will be affected equally, with those selling lower-value items likely to be hit the hardest by increased shipping costs.

For online shoppers, the impact of higher oil costs may result in higher prices for products and increased shipping and delivery costs. Many stores are expected to raise purchase minimums required for free shipping as fuel costs for shipping continue to climb.

Overall, the rise in oil prices is expected to have far-reaching effects on consumers, retailers, and the economy as a whole. It is essential for businesses to adapt to these changes and find ways to mitigate the impact on their customers.