Global food prices have stabilised in recent months but remain much higher than in 2021. The principal driver of global food price inflation — particularly prices of cereal, such as wheat — has been the war in Ukraine. Export restrictions in several countries have compounded global food price increases, although a few of these restrictions have recently lapsed. Low-income countries, where food represents a larger share of consumption, are feeling the impact of this inflation most keenly.
Countries with diets tilted towards commodities with the largest price gains (especially wheat and corn), those more dependent on food imports, and those with a large pass-through from global to local staple food prices are most distressed. Low-income countries whose people were already experiencing acute malnutrition and excess mortality before the war, especially in sub-Saharan Africa, have suffered a particularly severe impact.
Because energy and food are essential goods with few substitutes, higher prices are particularly painful for households. When prices of other items, such as electronics, furniture, or entertainment, increase, families can simply reduce or even eliminate spending on them. For food, heating, and transportation — often essential to earn a living — this is much harder. As a result, the current situation poses a threat not only to economic, but also to social, stability. Unrest has been rising since the end of the acute phase of the pandemic, consistent with the International Monetary Fund's (IMF) research that suggests that unrest is lower in during pandemics, and that higher food and energy prices are robust predictors of unrest.
Although unrest will not necessarily ensue, the link between prices and social stability means that further barriers to trade, or a poor harvest due to extreme heat and fertiliser shortages, risk causing further hardship, famine, or unrest. These risks could be allayed by easing logistic hurdles brought about by the invasion of Ukraine, including the Black Sea blockade.
International Monetary Fund
World Economic Outlook Update: Gloomy and More Uncertain