According to a new World Bank analysis, global food, energy, and metals prices will likely continue to fall in 2023. However, consumers won’t likely get much respite if commodity prices remain above pre-pandemic levels. Along with all that, inflation pressures are still quite high.
Since the year’s beginning, commodity prices have gone down significantly. The gradual fall placed pressure on the commodity markets. The World Bank stated in its Commodity Markets Outlook report on Thursday that prices dropped 32% from their historical highest. The record date goes back to June of last year. At the time, the world markets experienced the full consequences of the crisis in Ukraine. Meanwhile, commodities as a whole have fallen 14% since January.
The experts are now anticipating the price reduction for commodities to be 21% this year. Such a rate would be the highest since the epidemic before stabilizing in 2024.
According to the World Bank, prices for all main commodity groups are still much higher than before the outbreak. Therefore, despite the decline, consumers will probably still feel the squeeze. because
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The report also mentioned the effects on food costs, noting that while food prices were at their second-highest level since the grain shortages of 1973–75, fertilizer prices had reached an all-time high in real terms the previous year.
According to the report, annual domestic food-price inflation across 146 countries averaged 20% in February 2023, the highest level over the previous two decades. “Elevated food prices contribute to higher food insecurity, with severe implications for poorer populations in many developing economies,” it added.
According to the bank, the problems with food have been partially mitigated by decreases in energy prices. It was mentioned that declines in oil and natural gas prices were the main reasons why energy prices were 20% lower in the first quarter of 2023 than they were in the last quarter of 2022.
The bank anticipates that much of the current decline will be stable for the rest of the year. Perhaps, prices will continue rising in 2024.
According to the research, Russian energy and minerals are moving away from Europe and toward China, India, and emerging markets, lowering prices. The coal and gas sectors also are observing major changes in trade flows.
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