Food Prices Poised for Sharp Surge as Wars and El Nino Bite

The world is on the verge of another bout of food inflation due to wars in Iran and Ukraine, along with El Nino's impact on crop yields. This 'perfect storm' will lead to higher costs and lower yields, according to Maximo Torero, chief economist at the United Nations Food and Agriculture Organisation.

Food prices were a key driver of the 2022 global inflation surge but have been relatively benign so far this year. However, commodity prices are expected to increase soon, and food prices will follow suit by the end of the year and next year.

Torero warned that higher crude oil prices, fertiliser shortages from the Gulf region, diesel shortages in some parts of the world, and extreme weather events will contribute to rising costs. The transmission time from commodity to final food price is around three to six months.