Food and fuel price spikes to last at least 3 years - World Bank

World Bank expects energy prices to rise by more than 50%

Global food and fuel price spikes linked to the Ukraine crisis will last until at least the end of 2024 and raise the risk of stagflation, according to the latest World Bank report on commodity markets.

In its first comprehensive analysis of the impact of the Ukrainian crisis on commodity markets, the bank, which provides loans and grants to low- and middle-income countries, said the world is facing the biggest surge in commodity prices since the 1970s, REUTERS reported.

The situation is exacerbated, according to bank experts, by restrictions on trade in food, fuel and fertilizers, which exacerbate already high inflationary pressures around the world.

“Politicians should seize every opportunity to boost economic growth at home and avoid actions that harm the global economy,” said Indermit Gill, World Bank Vice President for Finance.

RUSSIA is the world's largest exporter of natural gas and fertilizers and the second largest exporter of crude oil . Together with Ukraine, it accounts for almost a third of world wheat exports, 19% of corn exports and 80% of sunflower oil exports.

The production and EXPORT of these and other goods was interrupted due to the Ukrainian crisis.

As a result, the World Bank expects energy prices to rise by more than 50% in 2022 and then fall in 2023 and 2024, while prices for non-energy commodities, including agricultural products and metals, will rise by almost by 20% in 2022.

The bank said commodity prices would only retreat marginally and remain well above the average of the past five years over the medium term.

“In the event of a protracted conflict or additional (Western) sanctions against Russia, prices could be even higher and more volatile than currently forecast,” the report said.

In terms of policy responses to the crisis, the bank highlighted tax cuts and subsidies that exacerbate supply shortages and rising prices, instead calling for school feeding programs as well as cash transfers and public employment programs for underprivileged groups.