Energy and food prices will remain at “historically high” levels until the end of 2024 due to disruptions caused by the war in Ukraine, the World Bank said in a report published on Tuesday.
According to the latest “Commodity Markets Outlook”, energy prices will increase by more than 50% in 2022 before moderating in 2023 and 2024, while the prices of non-energy products, including agricultural and metals, will increase by almost 20% in 2022.
If the war drags on, or Russia receives further sanctions for its invasion of Ukraine, prices could rise further and show even more volatility, the report warns.
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“Altogether, this represents the largest commodity crisis we have experienced since the 1970s,” said Indermit Gill, World Bank Vice President for Equitable Growth, Finance and Institutions, quoted in a statement.
The report anticipates that the shock of the war will push the average price of Brent crude oil to 100 dollars a barrel in 2022, the highest level since 2013, and 40% more than in 2021. By 2023, it estimates that it will be around 92 dollars a barrel.
On the other hand, by 2022 wheat prices are expected to rise by more than 40%, and metals by 16%.
A heavy toll
Ayhan Kose, director of the World Bank’s Outlook Group which produces the report, highlighted the magnitude of the supply crisis due to the war in Ukraine.
“The resulting rise in food and energy prices is exacting a heavy human and economic toll and is likely to slow progress in reducing poverty. Rising commodity prices are exacerbating already high inflationary pressures. around the world,” he reiterated.
The World Bank experts urged public policymakers to try to minimize the effects of this situation, encouraging them to design targeted social protection programs, such as cash transfers and public works, instead of setting subsidies for food and fuels.
By: AFP
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