Economic Impact of US-Israel and Iran Conflict on Companies
Companies are anticipated to experience increasing cost pressures due to the ongoing conflict between the US-Israel and Iran, which is disrupting supply chains and production processes.
Key Economic Consequences
- Raw material prices are expected to surge in the coming months.
- Rising energy costs and higher freight charges will contribute to inflationary pressures.
- Margins across various sectors, including oil marketing, fertilizers, ceramics, and others, will be squeezed.
Vulnerable Enterprises
- Micro, small, and medium enterprises are particularly susceptible to the economic impacts of the conflict.
Industry-specific Insights
- The input price index rose to a 15-month high of 54.7 in February, up from 52.5 in January.
- Cost increases are expected in industries such as processed food, hospitality, textiles, and automotive manufacturing.
Sectors Facing Highest Cost Pressures
Sectors highly dependent on petroleum and natural gas in their intermediate consumption will face the greatest cost pressures:
- Air transport: 48.7%
- Trade: 46.8%
- Auxiliary transport activities: 27.7%
- Electricity: 16.8%
- Land transport: 16.5%
- Agriculture: 10.3%
- Manufacture of chemical and chemical products: 9.5%
Impact on Wholesale Price Index (WPI)
Higher energy prices are expected to have a more significant impact on the WPI than on the Consumer Price Index due to the higher weight of petroleum and natural gas in the WPI (10.4% compared to 4.8%).
