MW Record-breaking diesel prices are poised to hit grocery prices, with fruits, vegetables and meat first on the list

Andrew Keshner

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Record diesel-fuel prices are on a collision course with your grocery bill, experts say.

Rising diesel prices have been a "silent killer" for Americans' wallets - but they could get louder soon, as prices for the fuel continue to shatter records.

Higher diesel prices were already pressuring prices for groceries - especially perishables that are trucked to stores, such as fresh fruits and vegetables. But more diesel-related price increases on consumer goods could land just as people start thinking up their Thanksgiving menus, experts say. That includes their turkey and pumpkin pie.

Since August, the price for diesel-powered trucks to haul commodities including soybean meal and corn - key ingredients in chicken and turkey feed - has gone up by 5 to 7 cents per bushel, said Jack Cooney, director of agricultural sales at Marex, a financial-services firm.

The 5- to 7-cent premium represents at least a 5% increase on transport costs, he noted, and that could show up in higher retailer prices for shoppers in about 45 days.

It's "very realistic to assume" grocery shoppers will be paying more by Thanksgiving, Cooney told MarketWatch. "There's a pig that has to pass through a python," Cooney said, referring to the surge in diesel prices. "Diesel is just causing rising input prices across the whole value chain."

Last week, economists at the U.S. Agriculture Department raised their price forecast on turkeys. The projected 2026 wholesale price on a frozen whole hen climbed to over $1.74 per pound. That's up from August, when the estimated per-pound price was $1.70.

"By itself, it's not a massive move," said Cooney. Still, it's an "indication [of] what consumers should expect through the end of the year."

Last year, turkeys cost approximately $1.35 per pound wholesale, USDA economists said. Families paid an average $21.50, or $1.34 per pound, for a frozen 16-pound Thanksgiving turkey last year, according to the American Farm Bureau Federation.

If this year's estimated $1.74 price holds, the same 16-pound Thanksgiving bird could cost almost $28.

Diesel prices have been breaking records since late last month. Wednesday's average price was $6.52 a gallon, less than a penny under Tuesday's new high, according to AAA. That's up from $5.60 one month ago and $3.69 one year ago.

In a time of strained affordability, people are sharply aware how important gas is for their everyday lives. Yet they may not know diesel's central role in their food bill and beyond.

Step on a farm and "there's a good chance if it's got a motor, it's running on diesel," said Jeffrey Dorfman, an agricultural and resource economist at North Carolina State University.

For most crops, the "energy share" of every dollar spent to produce the item ranges from 7% to 10%, said Dorfman. Sometimes, the cost is higher. Wheat's energy share is 19%, he noted, while a turkey's energy share is around 8%, mostly from the feed costs.

Diesel's recent price jump is "kind of a silent killer to people's wallets," said Denton Cinquegrana, chief oil analyst at Dow Jones Energy. (Dow Jones Energy is a unit of Dow Jones, the publisher of MarketWatch.)

Ongoing tensions in the Middle East and slowed shipping through the Strait of Hormuz have played into elevated prices, he said. The recent diesel surge, however, is linked to Ukrainian drone attacks on Russian refineries, as Ukraine continues to counter Russia's 2022 invasion.

"I don't see much to stem that tide on what's happening with diesel records for at least a week," Cinquegrana said Friday.

Meanwhile, President Donald Trump is considering a ban on U.S. diesel exports.

Higher energy prices are also starting to show in prices for Thanksgiving and Christmas air travel. Yet diesel's rise hasn't fully surfaced in grocery-store aisles - so far at least.

"We are not seeing much pass-through from increased diesel prices to consumer food products yet," said Caroline Coughlin, senior quantitative researcher at State Street PriceStats.

If higher prices materialize, they would come soonest in fresh meat, dairy and produce, she said. The PriceStats gauge has seen slowing food price increases since May, but there was still almost 4% annual inflation growth for these prices through mid-September, Coughlin said.

Price hikes take time, Cooney noted. Suppliers and retailers are wary of doing too much, too fast. Shoppers are price-sensitive and, when it comes to meat, they can switch to cheaper proteins, he said. But suppliers and retailers can't eat the cost themselves, Cooney added.

Trucking companies can't fully absorb it all either, according to Bob Costello, chief economist of the American Trucking Associations. Fuel surcharges on transportation contracts generally reset each week, using U.S. Energy Information Administration diesel-price data as a benchmark, he explained.

Even with the fuel surcharges, trucking companies don't fully recoup what they pay for diesel, Costello said, and many offer pay bonuses to fuel-efficient drivers.

Price increases depend on how much retailers are willing to tack on once goods are delivered, Costello added. "We, as consumers, will at least be seeing some increase in the buying season," he said.

There's good news and bad news depending on a person's Thanksgiving menu, according to Phil Lempert, editor of SupermarketGuru.com.

Most frozen turkeys were trucked to stores before diesel's sharpest increases, he said. So while people will likely pay more compared to last year, the price may not be as high as it could be.

Yet shoppers who prefer fresh turkey - around 10% of customers - should certainly get ready for the bird to take a bigger bite into their wallet, Lempert said. Those turkeys have roughly three-week shelf lives and will begin shipping in early November.

Supermarkets commonly offer deep discounts and promotional deals on turkeys, losing money so they can get it back when the shopper buys other ingredients and sides. This season's deals may not be as enticing because higher transport costs impact those ingredients too, Lempert said.

Consider a slice of pumpkin pie: This is "prime pumpkin season" in Illinois, the country's top supplier of the gourd, said Jacob Goebbert, co-owner and operations manager of a farm in South Barrington, Ill.

That farm grows pumpkins on 500 acres, mostly for decorations like jack-o'-lanterns. Rising diesel prices have carved Goebbert's margins, but he hasn't raised prices; his in-state distribution network doesn't require as much driving as farms with customers across state lines.

Illinois's harvest includes pumpkins for pie fillings this fall. "This is definitely the time those are being processed and delivered for Thanksgiving," Goebbert noted. It's likely that pumpkins for pie fillings will cost more, he said.

Farmers are in tight competition on prices, and price increases often come from brokers and distributors after crops leave the farm.

"In the end, it's the consumer that suffers because everyone does what they need to do," Goebbert said.