Why do energy shocks raise food prices too?

Transport and fertiliser need energy

Energy shocks | TradeLiga

Energy is in everything: transport, factories, fertiliser, your electricity bill. When its price jumps suddenly, that's an energy shock, and the whole economy feels it.
1973: Arab oil producers cut supplies to countries backing Israel. Oil prices roughly quadrupled within months, and years of high inflation and weak growth followed.
2022: after Russia invaded Ukraine, oil jumped above US$120 (chart), and Europe's gas prices at their peak were more than ten times their normal level.
Energy feeds into transport and food, so inflation follows. Eurozone inflation hit a record 10.6%, and in September 2022 Indonesia raised subsidised fuel prices by about 30%.
Winners and losers: exporters like Norway, Saudi Arabia and Canada earn more; importers like Japan, India and much of Europe pay more, and their currencies can suffer.
Common mistake
Mistake: thinking a shock lasts forever. High prices cut demand and bring new supply: Europe's gas prices fell back a long way in 2023.
Key takeaway
Energy shocks push up inflation everywhere, help exporters and hurt importers, and usually fade as supply and demand adjust.

An energy shock is... A sudden jump in energy pricesOil, gas or coal prices spike, often because of war or supply cuts.
Energy shocks usually push inflation... UpEnergy costs feed into transport, food and almost everything else.
Who can benefit from high oil prices? Oil exportersCountries that sell oil earn more for every barrel.
Why do energy shocks raise food prices too? Transport and fertiliser need energyHigher fuel and fertiliser costs flow through to what we pay at the shop.