Food inflation set to accelerate globally and persist into 2027
SINGAPORE/JAKARTA: Global food inflation is expected to accelerate in the coming months and persist well into 2027 as war-related shipping disruptions, higher farming costs and El Niño-driven drought put increasing pressure on supplies.
Food prices are already rising sharply across parts of Asia, the Middle East and North Africa. Rice prices in Indonesia have reached record highs, bread in Egypt has risen by a quarter and sugar prices in India have hit an all-time high after the weakest monsoon in more than a decade curbed production.
“All this has put considerable pressure on the system,” said Maximo Torero, chief economist at the United Nations’ Food and Agriculture Organization.
“We will see a bigger impact towards the end of the year, at the beginning of next year and potentially throughout next year.”
Food prices outpaced headline inflation in 22 percent of the 150 countries the World Bank analyzed in the September quarter, up from 14 percent in the previous quarter.
The FAO Food Price Index, which tracks a basket of internationally traded commodities, averaged 136 points in September, its highest level since November 2022.
Multiple supply shocks are adding to the pressure. Attacks on Black Sea grain infrastructure have disrupted wheat shipments, while insecurity in the Red Sea has forced vessels onto longer and more expensive routes around Africa.
The US-Israeli war on Iran has pushed up fuel prices and disrupted fertilizer exports through the Strait of Hormuz, while dry El Niño weather has reduced output in India and Southeast Asia.
Wheat prices have climbed more than 30 percent in 2026, while rice prices in major Asian exporting countries have risen 10 percent to 13 percent despite large inventories. Freight rates have increased about 50 percent on some key routes, including from the Black Sea to Southeast Asia.
Pressure could intensify as major food importers return to global markets. Some buyers in the Middle East and Africa had delayed purchases following strong domestic harvests but are now expected to replenish supplies.
“In a couple of months, there could be a significant new wave of demand as importers return to the market,” said Alexander Karavaytsev, a senior economist at the International Grains Council in London.
The buffer provided by record global grain inventories is also beginning to weaken, according to the FAO.
“Stocks and good harvests in previous seasons have provided a buffer, but those buffers are starting to come under pressure,” Torero said. “That means commodity price increases could become more pronounced.”
Meanwhile, food processors are renewing three- to six-month raw-material contracts at higher prices, with weaker currencies in some countries adding to costs.
“There is significant upside risk in prices,” Karavaytsev said.
Source – Indonesia News
