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

Global food inflation is set to increase as a series of supply shocks continue to impact cereal supplies, putting pressure on vulnerable consumers. In Indonesia, rice prices have hit record highs due to an El Niño-induced drought and delayed rainfall. A 63-year-old parking attendant in Jakarta mentioned that rice, tempeh, and tofu, which used to cost 7,000 to 8,000 rupiah, now cost 15,000 rupiah.

The cost of bread in Egypt has risen by a quarter, while sugar prices in India reached an all-time high due to the weakest monsoon in over a decade.

The United Nations Food and Agriculture Organization (FAO) predicts that global food inflation will intensify and persist well into 2027, driven by war-related shipping disruptions and the ongoing El Niño drought. Maximo Torero, chief economist at the FAO, stated that social unrest risks will heighten as food prices rise sharply in low- and middle-income countries, where it typically constitutes a larger share of household spending.

Multiple supply shocks have contributed to the rising food prices, including attacks on Black Sea grain infrastructure, which disrupted wheat shipments, and Red Sea insecurity that has forced vessels to take longer, costlier routes. Additionally, fuel prices have increased due to the US-Israeli war on Iran, and fertiliser exports through the Strait of Hormuz have been disrupted.

While wheat prices have risen more than 30% in 2026, rice prices in key Asian exporting countries have increased by 10% to 13%, despite large inventories.