Fear travels faster than arithmetic — and it moves fastest around the one household bill you cannot skip, defer, or really shop your way out of.
Groceries have been the sorest spot in American household budgets since 2022, when food prices rose 9.9% in a single year, the fastest pace since 1979, according to the USDA Economic Research Service. Prices never came back down. They just stopped climbing as quickly.
That history leaves a lot of people primed to believe the next warning. The Strait of Hormuz closure earlier this year did upend the fertilizer trade, and fertilizer does feed into what farmers plant and what you eventually pay at the register. The chain is real, which is exactly why the details matter.
So when a warning carrying a major bank’s name lands in that environment, it does not need much help to travel.
A JPMorgan (JPM) fertilizer analysis has been recirculating this week alongside a figure suggesting grocery prices could jump 12.3%. I read both the underlying research and the government data behind that number before writing a word of this.
The scary part turns out not to be what is not being shared.
How fertilizer prices reach your grocery cart
Most of the world’s crops depend on nitrogen fertilizer made from urea and ammonia, and the Middle East accounts for roughly 42% of global urea exports and 27% of ammonia exports, according to J.P. Morgan Global Research.
When the Strait of Hormuz closed, those shipments stalled during planting season. Global nitrogen benchmarks jumped 25% to 50% from the end of February, the bank’s European chemicals team found.
Related: Tyson Foods’ earnings reveal worrying food inflation trend
Nitrogen is unforgiving on timing. It has to be in the ground when the crop goes in, and there is no meaningful reserve to draw down. Miss the window and the yield is smaller.
That is the transmission belt, and TheStreet has traced how the Hormuz closure fed into American food costs before. Higher input costs push farmers to plant less or switch crops, and smaller harvests reach shelves months later as higher prices.
“Rising fertilizer prices could lift global food inflation temporarily to 4-5%,” said Nora Szentivanyi, a senior global economist at JPMorgan. Note the word temporarily, and note that the estimate is global rather than American.
What the USDA forecast actually says about 2027 groceries
Here is where the viral version breaks down. The 12.3% figure is real, and it does come from the government. It is not a forecast.
It is the upper bound of a 95% prediction interval for 2027 grocery prices. The midpoint, which is the actual forecast, is 2.9%. The lower bound is negative 5.6%, meaning the same model also allows for grocery prices to fall.
The agency is explicit about which figure to use, saying discussions should “focus on the midpoint of these forecast intervals,” according to the USDA Economic Research Service. The band is wide because 2027 is far out, and it narrows as the year fills in.
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I ran the household math both ways, because that is where this stops being a statistics quibble. A family spending $800 a month on groceries spends $9,600 a year. At the viral 12.3%, that bill rises about $1,181. At the USDA’s actual midpoint, it rises about $278.
The gap between the number being shared and the one the agency published is roughly $900 a year. Build a budget, a withdrawal plan or a hedge around the first figure and you have built it around a tail.
Where nitrogen prices went after the spike
The second problem is the calendar. The JPMorgan analysis making the rounds was published April 7, four months ago, and the market has moved a long way since.
The bank’s own chemicals analyst wrote then that elevated prices would hold through the second quarter before correcting in the back half. That is close to what happened.
Retail urea peaked near $864 a ton in mid-May and averaged $678 in the first week of August, according to DTN Progressive Farmer. Anhydrous ammonia fell from $1,126 to $963 over the same stretch, and UAN32 dropped 23% from its peak to below year-ago levels.
Here is the current scoreboard, which looks nothing like a building crisis:
- Retail urea averaged $678 a ton in early August, down roughly 21% from its May peak, according to DTN Progressive Farmer.
- Beef and veal prices are forecast to rise 10.7% in 2026, the USDA Economic Research Service reported.
- Egg prices are projected to fall 30.7% this year, the same USDA outlook shows.
- Fresh vegetable prices are projected to rise 6.8%, per USDA data.
None of that means the all-clear has sounded. Phosphates are still climbing, with DAP up 12% and anhydrous up 26% from a year earlier. Nitrogen has come well off its peak without returning to pre-conflict levels, and the strait remains only partially open.
“I’m not optimistic fertilizer prices will drop,” said Frayne Olson, a crops economist at North Dakota State University Extension, in comments reported by DTN Progressive Farmer. Holding steady, he said, would be the best case.
Sanya Kushak / Getty Images
What is actually pushing your grocery bill higher
Now the part worth your attention. Grocery inflation is real this year, and it is concentrated in one aisle.
Beef and veal ran 11.8% higher this June than a year earlier, and USDA forecasts a 10.7% rise for the full year.
The reason has nothing to do with the Persian Gulf. The American cattle herd has shrunk to its smallest size in 75 years, with wholesale beef at record highs for this point in the calendar.
That is a cattle cycle, and cattle cycles resolve on a multi-year clock. Rebuilding a herd means holding back breeding stock, which means selling fewer animals now, which keeps prices high while the herd grows.
Eggs, the villain of the last two years, are forecast to fall more than 30% in 2026. Overall grocery inflation is running 2.7%, close to the historical norm. That is a slower burn than the case that cheap food is over, but it is a different problem than a supply collapse. The story in your cart is a beef story wearing a supply-crisis costume.
How to think about your food budget moving forward
The useful response to a food-price scare is not to buy a hedge. It is to know which line items are moving and adjust the cart.
A 10.7% jump in beef against a 2.7% average means substitution does more for your budget than any asset allocation will.
Watch the USDA’s monthly outlook rather than a screenshot of it. The September update will tell you more about 2027 than any April research note can.
The broader lesson outlasts this scare. When a single alarming percentage circulates without a range attached, the range is usually the story. This one was worth about $900 a year, and it pointed at the wrong aisle.
Related: UBS sends strong verdict on food inflation, economy
