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Since the onset of the March 2026 escalation in the Gulf/Iran conflict, markets have focused overwhelmingly on oil, with Brent pushing past $100 per barrel. Headlines on the war ending, extending and pausing have whipped futures up and down, and positioning reflects genuine uncertainty over when the conflict resolves. Yet through the noise, Turnleaf’s proprietary daily indices for airfare, food, fuel and other core CPI categories tell a consistent story, which is that regardless of how the diplomatic timeline plays out the first stage of the inflation shock has already begun to appear in the data.

Prices may keep rising or stall from here depending on how the conflict resolves, but the broader question of whether the trajectory has shifted is largely settled. The inflation path has moved higher relative to the no-war counterfactual, and the diplomatic outcomes still on the table do little to reverse what has already worked into input costs. Nowhere is this clearer than in food, where the channel from crude to fertilizer to transport to retail shelf operates with lags long enough that the next several CPI prints are already in motion. Our inflation models flag the fuel impulse as the opening leg, with the delayed pass-through of upstream agricultural inputs such as transport fuel and fertilizer feedstocks like urea now beginning to surface in the daily data.

Country-level sensitivity to this shock is far from uniform. Economies whose currencies have depreciated against the dollar over the war window are absorbing the move on both the FX and commodity legs, while a handful of cases such as Peru carry an additional domestic shock component that is amplifying the food channel independent of Hormuz.

The agricultural commodity complex tells the story most clearly. See Figure 1. Urea is up roughly 50% and DAP up around 23% since late February, with the Gulf accounting for close to 40% of seaborne urea exports and no infrastructure workaround equivalent to the Saudi oil bypass pipeline. The vegetable oils complex has rallied harder than the grains given the biofuel linkage, with soybean oil up 21% and palm oil up 10%, while CBOT corn, soybeans and wheat sit in the low to mid single digits. The standout in the table is rice, which has rallied 25% over the same window on a combination of importer stockpiling, freight insurance premia on Asia-Europe routes, and India-side export caution, making it the second-largest move in the agricultural complex behind urea. Sugar by contrast has barely moved at 2%, which we read as Brazilian harvest dynamics offsetting the ethanol-switching channel that would otherwise have pulled it higher.

Figure 1. Approximate price change in agricultural commodity inputs and outputs from late February 2026 to late May 2026. Sources: Macrobond futures closes unless noted. DAP uses public Investing/Barchart FOB NOLA futures levels.

The table in Figure 2 suggests that food price changes are running ahead of FX depreciation in most markets, which means the bulk of what we are seeing is not currency-driven imported inflation but the front end of the input cost shock working through processor margins, transport and retail. The policy column adds a second axis (see Appendix for more details), with aggressive intervention clustered in economies where the food or fuel print has already crystallized.

Figure 2

Turkey leads at 7.1% food on an 11.3% fuel move and 4.4% lira depreciation, with only mild intervention flagged, which we read as fiscal constraint rather than policy preference. Italy and Germany show 4.3 and 2.7% food prints on near-identical 1.3% FX depreciation, but their policy responses diverge, with Germany moving to aggressive intervention while Italy has remained mild, which we view as more reflective of domestic political room than of the underlying CPI picture. Brazil at 3.9% food and 4.4% fuel with the real 1.4% stronger against the dollar is one of the cleanest read-throughs in the table, largely domestic and commodity-driven, and the aggressive policy response fits the political sensitivity of food inflation in Brasilia. Spain prints 3.6% food without a fuel pass-through showing in the index yet, and the aggressive policy response captures the suite of administered-price measures absorbing what would otherwise be a sharper diesel-driven move. Israel’s 3.4% food on a 9.5% currency appreciation is the outlier, with domestic shock content overwhelming what should mechanically be a disinflationary FX tailwind, and the minimal policy response reflects fiscal capacity being prioritized for wartime spending elsewhere. The United States and Canada round out this group at 2.6 and 2.2% food on fuel moves of 51.7 and 36.1% respectively, both flagged aggressive, and both representing front-loaded fuel pass-through that we expect to feed through to food prints over the coming quarter.

To read the rest, visit Turnleaf’s latest Substack post, here.