In the US, delivering lettuce has become more expensive than the lettuce itself — Fortune
In the United States, a regional supermarket chain reported that due to rising diesel fuel prices, transporting a head of lettuce from California costs more than the lettuce itself. As Fortune reports, diesel prices rose by 30% year-on-year, while the retailer cannot pass all transportation costs on to customers because of their high price sensitivity.
High diesel prices
The average price of diesel fuel in the United States reached $6.30 per gallon on Wednesday, about 68% higher than before the start of the war with Iran, according to AAA. The publication notes that refining constraints are keeping gasoline and diesel prices high, although the cost of crude oil has declined somewhat.
Diesel is an important fuel for industry, agriculture, and freight transportation. In the U.S. Federal Reserve's Beige Book, companies from different regions reported the spread of fuel surcharges in supply chains, pressure on profitability, and restraint in consumer spending.
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Impact on supplies
According to the Federal Reserve Bank of San Francisco, one manufacturer said that nearly every material purchased in recent weeks came with a freight surcharge. The Federal Reserve Bank of Boston warned that product costs could rise after existing contracts with carriers are renegotiated.
Carriers are also under pressure. The Federal Reserve Bank of Richmond reported that some companies could not maintain profitability after the spike in diesel prices because rates were fixed by contracts. To cover costs, they used accumulated reserves, postponed maintenance, or halted purchases of more fuel-efficient trucks.
In September, core inflation in the United States rose to 2.6%, compared with 2.4% in August, while core consumer spending outside gas stations increased by only 0.2%. Michael Pearce, chief U.S. economist at Oxford Economics, noted that Americans' total additional gasoline costs since the start of the year have already exceeded the increase in tax refunds compared with last year.
