World Bank warns of increasing domestic food price inflation

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Domestic food price inflation remains high in most poor countries, the World Bank has said in its latest food security update.

It said inflation higher than 5% is experienced in 57.9% of low-income countries (a decrease of 5.3 percentage points since the last update on February 1, 2024), 71.7% of lower-middle-income countries (2.2 percentage points lower), 48% of upper-middle-income countries (no change), and 45.5% of high-income countries (1.1 percentage points higher).

Since the last update of February 1, the bank says agriculture and export price indices closed 3% and 10% higher, respectively, while the cereal price index closed 2% lower.

The increase in the export price index was driven by an increase in cocoa and cotton, which increased by 22% and 8%, respectively, the bank explained.

Among cereals, maize and wheat prices closed 3% and 1% lower, while rice prices closed at the same level as two weeks ago, the report said.

It added that on a year-on-year basis, maize prices are 35% lower, and wheat prices are 21% lower.

Rice prices, on the other hand, are 26% higher. Compared to January 2020, maize prices are 12% higher, wheat prices are 6% higher, and rice prices are 51% higher.

The February 2024 Agricultural Market Information System (AMIS) Market Monitor highlights that in early 2024, global commodity markets have maintained relative stability, with wheat, maize, and soybean export prices hitting their lowest in two years, although rice prices are almost one-third higher than a year ago because of El Niño-induced production shortfalls and export restrictions imposed by India. Concerns have arisen over Brazil’s soybean production, with below-normal rainfall stressing crops.

Also, shipping disruptions have significantly affected global trade flows, particularly in key maritime chokepoints such as the Panama Canal and the Red Sea.

These disruptions have not only increased shipping costs but also delayed deliveries and affected global value chains, posing challenges to industries reliant on timely shipments.

Moreover, there are concerns about the potential long-term effects on trade costs, greenhouse gas emissions, and agricultural sector sustainability.

The 2023 Financing Flows and Food Crises report, developed by the Global Network Against Food Crises, underscores the significant external financing that countries and territories facing food crises have received.

Over the past seven years, these areas have received three-quarters of global humanitarian allocations and almost one-third of global development allocations. Despite these substantial investments, the report highlights a failure to address acute food insecurity.

In 2022, despite a seven-year high in allocations to food sectors, acute food insecurity levels peaked at an all-time high, with 258 million people facing crisis or worse conditions in 58 countries and territories.

The report calls for greater coherence between humanitarian and development financing to address the root causes of acute food insecurity and reduce humanitarian needs in the long term.

Following Russia’s invasion of 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 to increase domestic supply and reduce prices.

As of February 12, 2024, 16 countries have implemented 23 food export bans, and 8 have implemented 15 export-limiting measures.


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