World Bank Inflation Warning: "Energy Prices Up 51% and Food Prices Up 23% This Year"

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] The World Bank predicted a sharp rise in energy and food prices this year due to the Ukraine war, according to a report by The Wall Street Journal on the 26th (local time).

In a commodity market outlook report released on the same day, the World Bank forecasted that energy prices would rise by 50.5% and food prices by 22.9% this year. This is a slowdown compared to last year when energy prices nearly doubled and food prices rose by 31%. However, the World Bank pointed out that the increase itself is so significant that considerable shocks are inevitable. The rise in energy prices over the two years of last year and this year is the largest since the first oil shock in the early 1970s.

Aihan Kos, Director at the World Bank, said, "The rise in energy and food prices is causing enormous human and economic costs," adding, "It will further intensify already high inflationary pressures and stall poverty reduction."

The World Bank expects commodity prices to gradually decline starting this year. It projected that energy prices will fall by 12.4% and food prices by 10.4% next year. However, it anticipates that it will take a long time for commodity prices to stabilize to pre-COVID-19 pandemic levels.

The World Bank forecasted that Brent crude oil prices will average $92 per barrel next year and then fall to $80 per barrel in 2024. This is 13.6% higher than last year’s average price of $70.4.

Winter wheat prices are also expected to peak at $450 per ton this year, then decline to $380 and $370 per ton in the next two years, respectively. However, these levels remain significantly higher compared to the average prices of $315 and $232 per ton in 2020 and last year.

Regarding future commodity market outlooks, the World Bank said it depends on how long the Ukraine war and sanctions against Russia will last but expects the war’s impact to be long-lasting.

The World Bank stated, "The Ukraine war has changed the way commodities are traded, produced, and consumed," and "commodity prices will remain at high levels for the next several years."

This content was produced with the assistance of AI translation services.