Casablanca – The World Bank’s latest “Commodity Markets Outlook” report warned that the depreciation of most developing economies’ currencies is pushing up food and fuel prices, potentially exacerbating the global food and energy crises.
Food prices have risen as a result of soaring energy commodity prices, which are also attributed to agricultural production, the report explained.
The World Bank’s study found that nearly 60% of oil-importing emerging markets and developing economies saw higher fuel prices in local currency due to depreciation during this period.
Nearly 90% of these economies experienced a higher rise in wheat prices in local currency than in dollars, the study confirmed.
According to the report, food price inflation in South Asia averaged more than 20% in the first three quarters of 2022, while it ranged between 12% and 15% in other regions.
On the other hand, the study’s findings revealed that food price inflation is low only in East Asia and the Pacific due to the stability of rice prices, which is the region’s main staple.
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“Although many commodity prices have retreated from their peaks, they are still high compared to their average level over the past five years,” said World Bank’s Vice President for Equitable Growth, Finance, and Institutions Pablo Saavedra.
“A further spike in world food prices could prolong the challenges of food insecurity across developing countries,” Saavedra added, noting that “an array of policies is needed to foster supply, facilitate distribution, and support real incomes.”
However, the report emphasized that the volatile nature of the energy markets that has been observed since the start of the Ukrainian conflict should now be subsiding.
Thus, the World Bank expected energy prices to fall by 11% in 2023, following the 60% increase in 2022, highlighting that they will remain 75% higher than their normal five-year average.
The financial institution also expected agricultural commodity prices to decline by 5% next year, while metal prices are predicted to fall 15% in 2023.
The report also focused on the risk of a global recession next year, which has already weighed heavily on copper and aluminum prices.
