Food prices soar in developing world amid Ukraine crisis, World Bank says | Company
Food inflation has soared across much of the developing world since Russia’s invasion of Ukraine and has trapped several rich countries in a cycle of rising prices, according to a World Bank report.
The Washington-based development organization said the war in Eastern Europe would hit many countries with rising food bills worth more than 1% of their annual national income (GDP), while others would fail to contain the impact and would be plunged into a full-blown debt crisis.
Lebanon was hardest hit, according to the World Bank, after a food grain store explosion in Beirut two years ago crippled the Mediterranean country’s ability to store and distribute corn and wheat. to its 6.8 million inhabitants.
Food inflation there reached 332% in the year to June, ahead of increases of 255% in Zimbabwe and 155% in Venezuela. Turkey was fourth with a food inflation rate of 94%.
The gap between food inflation in Lebanon and general inflation – which produces a “real food inflation” figure – was lower, at 122%, but still the worst rate in the world, mainly because soaring Energy costs pushed Lebanon’s general inflation rate above 150%.
A deal last month between Ukraine and Russia, brokered by Turkey and the United Nations, to allow container ships carrying grain to leave Ukrainian ports has helped to lower commodity prices.
World Bank figures showed a dramatic reversal in cereal prices on world markets since June and a sharp drop in prices for other agricultural products to levels close to those seen last year.
On Monday, the Sierra Leone-flagged freighter Razoni left the Ukrainian port of Odessa carrying more than 26,000 tonnes of maize bound for Lebanon.
The cost of rice has been rising in recent months, but from a low during the pandemic that bucked the trend of historically high price levels for wheat, barley and corn.
Bangladesh last week appealed to the International Monetary Fund (IMF) for financial support after a rise in the cost of imported food and energy threatened to undermine the finances of South Asian countries.
Bangladesh would need around $4.5bn (£3.6bn), although only $1-1.5bn is available under current IMF arrangements.
Sri Lanka has already requested a bailout from the Washington-based fund after running out of cash to buy vital imports, while a deal with Pakistan for a $6 billion IMF loan was revived in June.
Low food prices have supported global growth in recent decades, offsetting the high cost to developing countries of servicing their debts and importing fuel.
However, the World Bank said the sharp rise in food prices in recent months was affecting most economies, including those with relatively high incomes.
“The share of high-income countries with high inflation has also increased sharply, with around 78.6% experiencing high food price inflation.
“The most affected countries are in Africa, North America, Latin America, South Asia, Europe and Central Asia,” he said.
He also warned that major grain producers, including France, Spain and Italy, would have to adapt to rising temperatures and uncertain weather brought about by the climate crisis to maintain high production levels.