Energy prices pose risk of inflation and food cost: World Bank

NEW DELHI: Commodity prices have been going through the ceiling globally recently. The cost of gas has been pushed to the extent that it is threatening to supersize food insecurity in low-income countries. World Bank released a report stating that agricultural prices are expected to end this year at 22% higher in comparison to 2020. The report projected the cost to decline only modestly next year.

According to the report, costs of fertilizer have seen an increase of 55% since January this year only. Some manufacturers have even reduced or altogether halted their production, which has contributed to elevated food prices. It noted that sustained high prices of commodities are becoming taxing for not only the lower-income countries like Zambia, but also for middle-income nations like Argentina and Turkey. Moreover, agencies of the United Nations have warned that more than 20 nations worldwide, including Ethiopia, are at the threshold of facing acute food insecurity. The report noted that the number of people affected by food insecurity has risen from 135 million people before the COVID-19 pandemic, to 155 million in 2020.

World Bank stated in its report that for the nations that import energy, the rise in prices of things like natural gas could create a crippling burst of inflation. This could erode the already curtailed spending power of citizens hurt by the pandemic. Secondary effect of all this is expected to be seen as slowdowns in general growth. International Monetary Fund has also been warning about a two-track economic recovery from COVID-19, with lagging prospects for much of the world.