The Middle East war, initially a geopolitical conflict, has evolved into a cost-of-living crisis for Indian households. Disruptions to oil supply routes, rising freight rates, and higher petrochemical prices are rippling through the economy.
Strait of Hormuz: The Trigger
The strategically crucial Strait of Hormuz, through which nearly 20% of global oil and energy supplies move, has become a flashpoint. Since tensions escalated after US-Israel joint strikes on Iran, the passage has been squeezed, pushing up shipping costs, insurance premiums, and crude oil prices. Consequently, everything from LPG cylinders to sofas is getting costlier.
Impact on Indian Kitchens
The first impact is being felt in Indian kitchens. India, a major LPG importer, has seen domestic cylinder prices jump from Rs 853 to Rs 913, while commercial cylinders rose from Rs 1,768 to Rs 3,071.50. Cooking oil prices have also increased, with sunflower oil up by around Rs 15 per litre and mustard oil by nearly Rs 10 per litre in several markets.
Daily staples may soon feel the pressure. India imports 5–6 million tonnes of pulses annually, and rerouted shipments around Africa due to Middle East disruptions are increasing freight and insurance costs. Industry officials warn that dal prices could rise further if tensions continue. Dry fruits have already seen sharp increases, with Mamra almonds surging from Rs 1,800 to Rs 2,800 per kg, Iranian pista from Rs 1,650 to Rs 2,400 per kg, and premium Pishori pista from Rs 2,600 to Rs 3,400 per kg. Mithai shops are also affected, with sellers saying maintaining quality has become far more expensive.
Furniture and Home Interiors Costlier
The war is making Indian homes more expensive to furnish. Furniture makers say modular furniture and premium interiors could become 10–15% costlier because modern sofas, wardrobes, and modular kitchens rely heavily on petrochemical products linked to crude oil. Furniture brand Orange Tree reported foam prices surging over 45% and packaging costs jumping nearly 70%. The plywood industry is under pressure as chemicals like methanol and resins, critical for adhesives, are imported from the Middle East. Even painting a home may cost more, with decorative paint prices expected to rise by 9–10%, and companies like Berger Paints announcing hikes.
Electronics, Clothes, and FMCG Products Under Pressure
Electronics and appliances may soon become more expensive. Industry executives say TVs, refrigerators, and air-conditioners could see price hikes of 5–6% due to costlier plastic components and petrochemical-based materials. Godrej Enterprises has indicated prices may rise as suppliers increase rates. The fashion and textile industry is also under strain, with textile hubs in Ahmedabad and southern India reporting sharp jumps in fuel and chemical costs after industrial gas supplies were curtailed. Polyester fibre prices have risen by Rs 12 per kg within a week, according to industry bodies. Ankit Patel, former president of the Vatva Industry Association, said reduced gas supply has severely affected chemical production, leading to huge price rises in coal, sulphuric acid, and phthalic anhydride. Processing units say imported coal prices surged nearly 30%, while chemical prices linked to dyes and fabrics are up 25–40%, potentially pushing up clothing prices.
FMCG companies say costs of plastics, resins, polymers, and packaging materials have surged by as much as 25% in recent weeks, affecting products like soaps, shampoos, detergents, toothpaste, creams, hair oils, and packaged foods. Several companies are considering price hikes or smaller pack sizes to protect margins.
Flights, Fuel, and Cars Getting Costlier
Air travel has become more expensive. Airlines have started adding fuel surcharges after aviation turbine fuel prices surged. IndiGo introduced surcharges ranging from Rs 425 to Rs 2,300 on flights, while Air India and Air India Express announced additional charges of Rs 399 on domestic tickets. Akasa Air added surcharges from Rs 199 to Rs 1,300. Industry executives say further fare hikes may become unavoidable if fuel prices remain elevated. The automobile sector is facing similar pressure, with luxury carmakers Mercedes-Benz and Audi announcing price hikes of around 2%, while mass-market companies prepare smaller increases. Crude oil prices remain volatile, with Brent crude crossing $100 per barrel, and analysts warn prices could rise further if tensions escalate around the Strait of Hormuz.
Fuel companies are under severe financial strain. State-run oil marketing companies—Indian Oil, BPCL, and HPCL—have incurred losses exceeding Rs 1 lakh crore over the past 10 weeks as they continued selling petrol, diesel, and LPG below market-linked costs despite soaring global crude prices. They are suffering daily under-recoveries of around Rs 1,600–1,700 crore. Petrol and diesel prices in India have largely remained frozen at around Rs 94.77 and Rs 87.67 per litre, respectively, while domestic LPG prices were increased by Rs 60 in March. Government sources said that if crude prices remain elevated, oil companies may need larger borrowings, and a petrol and diesel price hike may eventually become unavoidable, depending on political timing. Experts warn that another round of fuel price hikes could feed into transport costs, grocery prices, logistics, and overall inflation.
Medicines and Healthcare Costlier
Healthcare is another area feeling the strain. Medical-grade plastics used in syringes, gloves, and surgical products have become 50–60% more expensive since the conflict intensified. Traders say prices of surgical products like nebulisers, BP machines, and glucometers may rise by 10–20%. Nikhil Malang, organising secretary of the Prayag Chemist and Druggist Association (Retail), said sea freight rates have risen sharply, causing delays in raw material imports, while operational capacity of major airports in the Gulf region has dropped by up to 80%, leading to delays of several weeks. The pharmaceutical industry has sought temporary price relief from the government, warning that costs of key chemicals and solvents used in medicine manufacturing have surged by 30–100% within weeks. The Centre may consider a temporary 10–15% increase in prices of select essential medicines if disruptions continue.
Invisible Impact: Rupee Weakens and Stock Market Losses
The war is also weakening the rupee, which has fallen from around 90 against the US dollar to beyond 95, making overseas education and foreign travel more expensive. The rupee recently slipped near record lows of 95.40, increasing costs of tuition fees, rent, and living expenses abroad. Stock market turbulence triggered by the conflict has erased nearly Rs 34 lakh crore in investor wealth until mid-March, affecting mutual funds, retirement savings, and household investments. For many middle-class families, portfolios are suddenly worth less, forcing people to delay purchases or cut discretionary spending.
Why a War Thousands of Kilometres Away Affects India
India imports a large share of its crude oil and several petrochemical-linked materials. When global shipping routes become risky or oil prices rise sharply, those costs eventually flow through the economy. The result is that a conflict in the Middle East slowly shows up everywhere—in fuel bills, grocery baskets, airline tickets, shopping expenses, and household budgets. For now, many companies are still absorbing part of the increase, but if oil prices remain high and shipping disruptions continue, economists warn that inflationary pressure could deepen further in the coming months. A war in the Middle East is no longer just a geopolitical story for Indian households; it is increasingly becoming a monthly budget story.
