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The price of fuel continues to rise in the global market, the transportation of goods is being disrupted due to war, and the drought caused by the El Nino effect has reduced crop production. For these reasons, there is a risk of further increase in food prices in the international market. Experts say that this trend of food price inflation may intensify in the coming months and may last until 2027. As a result, ordinary consumers in low- and middle-income countries in Asia, the Middle East and North Africa will be the most affected.
Maximo Torero, chief economist of the Food and Agriculture Organization of the United Nations (FAO), said that there is now a major pressure on the food supply system. This will be seen at the end of this year, at the beginning of next year, and even throughout next year.
Food prices are rising rapidly in low- and middle-income countries in the Middle East, North Africa and Asia. Families in these countries spend a large part of their income on buying food. As a result, the poor are having to bear the brunt of the price increase.
The World Bank analyzed data from 150 countries and found that in 22 percent of these countries, the rate of food price increase was higher than overall inflation in the third quarter of this year (July-September). In the previous quarter (April-July), the rate was 14 percent.
According to World Bank data, this rate of food price increase has exceeded general inflation in many countries. In September, the global food price index rose to an average of 136 points, the highest since November 2022.
Rising food prices pose a risk of social unrest. To deal with the situation, major food exporting countries may impose export restrictions. This is likely to further reduce supply in the market.
Multidimensional supply crisis
The global supply of wheat is being disrupted due to attacks on grain export-related infrastructure in the Black Sea region. As a result, major importing countries such as Egypt and Indonesia are forced to look for alternative markets. Due to insecurity in the Red Sea, cargo ships are forced to use long and expensive routes around Africa.
Fuel prices are continuously rising in the global market as the US and Israel continue their war on Iran. Fertilizer exports through the Strait of Hormuz are also being disrupted. This is increasing the cost of agricultural production. On the other hand, crop production in India and Southeast Asia is decreasing due to dry weather due to the effect of El Nino.
This year, wheat prices in the global market have increased by more than 30 percent compared to the previous year. Despite adequate rice stocks in major Asian exporting countries, prices have increased by 10 to 13 percent. Fertilizer prices reached their highest level at the beginning of the Iran war. Although they have come down slightly from there, prices are still high.
Nestle India Chairman and Managing Director Manish Tewari said that the business environment has become difficult due to the high prices of products. Inflation in food prices in particular is now a harsh reality.
In Egypt, the price of a large loaf of bread without subsidies has risen to about £5 from £4 in July. Cooking oil prices in the United Arab Emirates have risen by about 40 percent.
In Indonesia, the world's largest palm oil producer, edible oil prices have also risen by 7 percent this year.
In September, the prices of sugar, onions and pulses rose more than 10 percent compared to the previous month as production in India fell.
Sayed Abdel Hamid Mohamed, who runs a bakery in the heart of Cairo, the Egyptian capital, says it's not just flour that has risen. He says it's also expensive to hire skilled workers. The prices of electricity, water, yeast and all the ingredients used to make bread have increased.
The cost of transportation has also increased due to the rise in fuel prices and the war. Freight rates on some of the key international shipping routes from the Black Sea to Southeast Asia have risen by nearly 50 percent.
Inflation fears grow further
Food prices have been rising since late 2025. Now, as domestic supply and rising production costs are being passed on to consumers, inflation is expected to accelerate.
Some major importing countries in the Middle East and Africa have been cutting back on international food purchases due to good local harvests. Now they will have to turn to global markets, which could lead to a sudden surge in international demand.
Alexander Karavaitsev, a senior economist at the London-based International Grains Council, said that a new wave of demand could emerge if importers return to the market in a few months.
FAO's Torero said that record global grain stocks have provided some protection for the market for a while. But that protection is gradually waning.
Food processors usually buy raw materials on three- to six-month contracts. Now they have to pay higher prices when renewing these contracts. The depreciation of the local currency has further increased the cost of imports.
Franciscus Welirang, director of PT Indofood, Indonesia's largest food company, said that the cost of transporting goods has also increased. The impact of this cost is even greater when calculated in rupiah as the Indonesian currency, the rupiah, has weakened.
Traders said that in addition to paying higher prices, food processing companies are also having trouble procuring necessary raw materials.
A senior official at a flour manufacturing company in Jakarta, who asked not to be named, said that some Indonesian wheat mills are producing less than their production capacity due to a decrease in wheat shipments due to the Russia-Ukraine war.
According to research firm Kepler, Indonesia's wheat imports in September fell 41 percent from the same period last year to 491,000 tons.
However, there are sufficient stocks of soybeans and corn for now. Future supplies of these two crops will depend on production in the United States and South America. These crops have increased in the production of biofuels.
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Source: Online/GFMM
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