Global food inflation is expected to intensify as supply shocks pile up

Rice prices in Indonesia have reached record highs due to El Niño-induced drought and delayed rainfall. A 63-year-old parking attendant, Muhamad Yasin, says he has reduced meals as food staples have become unaffordable. Rising prices have put pressure on vulnerable consumers. Global food inflation is expected to intensify and persist into 2027 due to supply shocks from war-related shipping disruptions, El Niño-induced drought, and other factors.

Food prices in low- and middle-income countries are rising sharply, particularly in the Middle East, North Africa, and Asia. The World Bank reported that food prices outpaced headline inflation in 22% of 150 countries in the September quarter, up from 14% in the previous quarter. Wheat and rice prices have increased significantly, while fertilizer prices remain elevated.

Rising inflation, especially food inflation, poses a risk of social unrest and may lead to governments imposing export bans. Supply shocks from attacks on Black Sea grain infrastructure, Red Sea insecurity, and disruptions in fertiliser exports have contributed to the situation.