Food prices rise in developing countries amid crisis in Ukraine, World Bank finds | Company


Food inflation has risen in much of the developing world since Russia’s invasion of Ukraine, trapping several wealthier countries in a cycle of rising prices, a World Bank report found.

The Washington-based development agency said the war in Eastern Europe would hit many countries with a rise in food bills worth more than 1% of their annual national income (GDP), while others would be unable to contain the impact and in a fully-blown debt crisis.

Lebanon was hardest hit, the World Bank said, after an explosion at its grain warehouse in Beirut two years ago crippled the Mediterranean country’s ability to hold and distribute maize and wheat to its 6.8 million people.

Food inflation there reached 332% in the year to June, before rising 255% in Zimbabwe and 155% in Venezuela. Turkey was in fourth place with food inflation of 94%.

The gap between Lebanese food inflation and headline inflation – yielding “true food inflation” – narrowed at 122%, but remained the world’s worst figure, mainly as rising energy costs pushed Lebanon’s headline inflation above 150% .

A deal last month between Ukraine and Russia, brokered by Turkey and the United Nations, to allow container ships carrying grains to leave Ukrainian ports helped lower commodity prices.

World Bank figures showed a dramatic reversal in grain prices on world markets since June and a sharp drop in the price of other agricultural products to lows close to last year’s.

On Monday, the Sierra Leone-flagged cargo ship Razoni left the Ukrainian port of Odessa with more than 26,000 tons of maize destined for Lebanon.

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Rice has risen in price in recent months, but from a low level during the pandemic that broke the trend of historically high price levels for wheat, barley and maize.

Last week, Bangladesh appealed to the International Monetary Fund (IMF) for financial assistance after a rise in the cost of imported food and energy threatened to undermine South Asian countries’ finances.

Bangladesh is expected to need about $4.5 billion (£3.6 billion), although only $1 billion – $1.5 billion is available under current IMF arrangements.

Sri Lanka has already called for a bailout from the Washington-based fund after it ran out of cash to buy essential 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 costs for developing countries to pay off their debts and import fuel.

However, the World Bank said the shocking rise in food prices in recent months affected most economies, including those with relatively high incomes.

“The share of high-income countries with high inflation has also increased sharply, with about 78.6% experiencing high food price inflation.

“The countries most affected are in Africa, North America, Latin America, South Asia, Europe and Central Asia,” it said.

It also warned that major grain producers, including France, Spain and Italy, would have to adapt to rising temperatures and uncertain weather patterns caused by the climate crisis to maintain high production levels.

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