Home Economy Global domestic inflation remains high—WBG

Global domestic inflation remains high—WBG

by Business News Report

World Bank Group has said in its latest news letter that “domestic food price inflation remains high around the world”. It said that information between September to December 2022 shows high inflation in almost all low-income and middle-income countries; 94.1% of low-income countries, 92.9% of lower-middle-income countries, and 89% of upper-middle-income countries have seen inflation levels above 5%, with many experiencing double-digit inflation. The share of high-income countries with high food price inflation has risen to 87.3%. The countries affected most are in Africa, North America, Latin America, South Asia, Europe, and Central Asia.

It further said “since the last update on December 13, 2022, agricultural, cereal, and export prices have remained relatively stable. The agricultural index closed at the same level, the export index 1% higher, and the cereal index 1% lower. Maize and wheat prices closed 1% and 2% lower, respectively, and rice prices 1% higher. Maize and rice prices are 8% and 13% higher, respectively, than in January 2022, and wheat prices 2% lower. Maize and wheat prices are 27% and 13% higher, respectively, than in January 2021, and rice prices 10% lower. A December 2022 report released by the International Monetary Fund (IMF) has indicated that global food prices are expected to remain high because of war, energy costs, and weather events, despite interest rate hikes having slightly eased price pressures. Record prices have increased food insecurity, raised social tensions, and strained the budgets of countries that rely on food imports.

The 2022 Financing flows and food crisis report released by the Global Network Against Food Crises highlights that countries that experience food crises receive the most humanitarian financing. When all sectors are considered, development allocations to food crisis countries are much larger than humanitarian assistance. When considering allocations to countries based on drivers of food crises, countries where conflict and insecurity are the main drivers absorb the largest share of humanitarian and development assistance. A recent World Bank blog underscored that high fertilizer prices have become a significant obstacle to food production in low income countries, destabilising the 2023 and 2024 crop cycle; 205 million people are in acute food insecurity in 45 countries worldwide. Many of these countries lack sufficient raw materials—nitrogen, potash, phosphate, natural gas—and production facilities to ensure that farmers can affordably access fertilisers. The challenge is clearest in Sub-Saharan Africa, where disruptions to fertiliser exports from Belarus and Russia and restrictions of other exporting countries have hit poor households hardest. Fertiliser prices have tripled since early 2020 and remain volatile, preventing smallholder farmers from accessing a stable supply. Meanwhile, farmers in more-advanced economies can afford to plant more and purchase fertiliser because they benefit from subsidies that often cover natural gas for fertiliser and diesel fuel for equipment.

A new analysis conducted by IFPRI  of 1.27 million children in 44 low- and middle-income countries explores the potential impacts of food inflation on wasting and stunting among 1.27 million pre-school children. The study demonstrates that the impacts of food inflation strike early—in the first 1,000 days of life—and during pregnancy and infancy and disproportionately affect the rural poor and landless. As such, there is an urgent need to improve women’s nutrition and health before and during pregnancy to guarantee prenatal health and nutrition support for mothers and children. Following the start of the war in Ukraine, trade-related policies imposed by countries have surged. The global food crisis has been partially made worse by the growing number of food trade restrictions put in place by countries with a goal of increasing domestic supply and reducing prices. As of December 2022, 19 countries have implemented 23 food export bans, and eight have implemented 12 export-limiting measures.

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