India Food Demand Weakens: Iran-Israel Conflict & LPG Shortage Impact | Pune News
Pune, India – A slowdown in food consumption is emerging across India as disruptions to liquefied petroleum gas (LPG) supplies, triggered by the escalating conflict in the Middle East, begin to impact households and businesses. The squeeze on LPG availability is forcing restaurants to curtail operations and consumers to adjust their purchasing habits, with early indicators suggesting a weakening in demand for key food commodities.
Wheat flour sales have decreased by 5-7% over the past three weeks, according to Rohit Khaitan, vice president at the Roller Flour Millers’ Federation of India. He attributed the decline to reduced offtake from the bakery industry, directly linking it to the LPG shortage. “The demand for refined wheat flour (maida) from the bakery industry for bread and biscuits has reduced by about 5-7% since last 15-20 days due to the shortage of LPG fuel and is feared to go down further,” Khaitan said. With the new wheat crop already available, he warned that prices could come under further pressure.
The edible oil market is experiencing similar pressures, particularly among bulk consumers. Hotels, restaurants, and catering services, alongside millions of street food vendors, collectively consume approximately 500,000 tonnes of palm and soybean oil monthly, according to industry estimates. Sandeep Bajoria, chief executive officer at Sunvin Group, reported a significant contraction in this demand. “The consumption of palm oil by hotels, restaurants and canteens has declined by 40%… While soybean oil consumption is down by about 25%,” Bajoria stated. Overall institutional and small food business demand has fallen by 30-35%.
Despite the drop in consumption, edible oil prices have not eased. B.V. Mehta, executive director of the Solvent Extractors’ Association of India, explained that increases in freight costs, foreign exchange rates, and fuel prices are offsetting the impact of reduced demand. “Although edible oil consumption has declined due to reduced demand from hotels and restaurants, the increase in freight, forex and fuel prices are keeping cooking oil prices firm in the off season,” Mehta said.
The impact extends to gram flour, or besan, a key ingredient in Indian fried snacks. Demand for besan has fallen by 10-12% as roadside eateries and small food businesses scale back operations or temporarily close due to the LPG shortage. This highlights the critical role of informal food networks – from office canteens to street stalls – in driving commodity demand.
The current LPG supply issues stem from disruptions to energy shipments through the Strait of Hormuz following US-Israeli strikes on Iran and subsequent retaliatory actions. According to reports from CNBCTV18, the Strait of Hormuz, handling roughly 20% of global oil and gas trade, has faced security risks and shipping disruptions. India imports approximately 90% of its crude oil and a substantial portion of its gas, making it vulnerable to disruptions in this key maritime corridor. The Indian government is attempting to manage the supply with a 25-day booking gap for LPG cylinders and is exploring alternative import sources, including Algeria, Australia, Canada, and Norway.
Reports from across India indicate growing consumer anxiety. The BBC reported on March 12, 2026, that queues are forming outside cooking gas dealers in cities and towns across the country. Similar scenes were reported in West Bengal, with consumers waiting for extended periods to refill cylinders, and online booking systems experiencing crashes due to heavy traffic, according to the Times of India. The National Restaurant Association of India has stated that many restaurants have been forced to close, particularly in Delhi and southern India, with some operators switching to alternative fuels like coal, wood, and electric cookers.