Food and fuel price shocks from war in Ukraine will last at least 3 years, World Bank says

Global food and fuel price shocks related to the Russian-Ukrainian war are expected to last at least until the end of 2024 and increase the risk of stagflation, the World Bank said in its latest commodity market outlook report.

In his first comprehensive analysis of the impact of war on commodity markets, the bank, which provides loans and grants to low- and middle-income countries, said the world was facing the biggest commodity price shock since the 1970s.

It is compounded, he said, by trade restrictions in food, fuel and fertilizers which are exacerbating already high inflationary pressures around the world.

“Policymakers should seize every opportunity to increase economic growth at home and avoid actions that harm the global economy,” said Indermit Gill, World Bank Vice President for Equitable Growth, Finance and Institutions.

Russia is the world’s largest exporter of natural gas and fertilizers and the second largest exporter of crude oil. Together with Ukraine, it represents almost a third of world wheat exports, 19% of corn exports and 80% of sunflower oil exports.

Production and exports of these and other products have been disrupted since Russian invasion of Ukraine on February 24.

As a result, the World Bank expects energy prices to rise more than 50% in 2022 before falling in 2023 and 2024, while non-energy prices, including agriculture and metals, are expected to climb almost 20% in 2022 before moderating.