KEY POINTS
- Global food inflation could intensify towards the end of 2026 and persist into 2027, according to Reuters reporting published on Monday.
- Reuters, citing World Bank data, reported that food prices outpaced headline inflation in 22 per cent of 150 countries in the September quarter, up from 14 per cent in the previous quarter.
- The Food and Agriculture Organization’s Food Price Index reached 136 points in September, its highest level since November 2022.
- Wheat prices have risen by more than 30 per cent in 2026, while rice prices in key Asian exporting countries have increased by 10 to 13 per cent.
- Shipping disruptions, higher fuel and fertiliser costs, and weather-related production risks are adding to pressure on food supplies.
MAIN STORY
Global food inflation could intensify in the coming months and persist into 2027 as shipping disruptions, rising agricultural production costs and adverse weather conditions threaten food supplies, Reuters reported on Monday.
In its analysis, Reuters examined the effects of supply disruptions and rising commodity prices on consumers and food businesses across Asia, the Middle East and North Africa, where higher food costs are placing additional pressure on household budgets.
The report illustrated the impact through the experience of Muhamad Yasin, a 63-year-old parking attendant in Jakarta, Indonesia, who told Reuters that the cost of a meal comprising rice, tempeh and tofu had risen from 7,000 to 8,000 rupiah to about 15,000 rupiah. Yasin said he had reduced his meals because food had become increasingly difficult to afford.
The pressures are reflected in international inflation indicators. According to World Bank data cited by Reuters, food prices outpaced headline inflation in 22 per cent of 150 countries analysed in the September quarter, compared with 14 per cent in the previous quarter.
The Food and Agriculture Organization of the United Nations’ Food Price Index averaged 136 points in September, its highest reading since November 2022. The index tracks monthly changes in a basket of internationally traded food commodities.
Reuters reported that wheat prices had risen by more than 30 per cent in 2026, while rice prices in key Asian exporting countries had increased by between 10 per cent and 13 per cent, despite substantial inventories.
Several supply pressures are contributing to the increase. Attacks on grain infrastructure in the Black Sea region have disrupted wheat shipments, while insecurity in the Red Sea has diverted vessels onto longer routes around Africa, raising transportation costs.
The war involving the United States, Israel and Iran has also driven up fuel prices and disrupted fertiliser exports through the Strait of Hormuz, increasing costs for farmers and food producers. Meanwhile, concerns about El Niño-related drought have raised the risk of weaker agricultural production in India and Southeast Asia.
Reuters also reported that freight rates on some key international routes, including shipments from the Black Sea to Southeast Asia, had risen by about 50 per cent as fuel costs and war-related premiums increased.
The effects are already visible in several domestic markets. In Egypt, Reuters reported that unsubsidised bread had risen to around five Egyptian pounds for a large loaf, from four pounds in July. In the United Arab Emirates, cooking oil prices had increased by about 40 per cent.
Indonesia has also recorded a 7 per cent increase in vegetable oil prices this year, while sugar, onions and pulses in India rose by more than 10 per cent in September from the previous month.
Maximo Torero, chief economist at the FAO, told Reuters that the combined pressures could have a greater effect towards the end of 2026 and continue through the following year.
THE ISSUES
Reuters’ reporting points to a combination of supply and cost pressures that could make food inflation more difficult to contain. The risks extend beyond the prices of individual commodities because higher fuel, fertiliser and freight costs can feed into production, processing and distribution expenses.
For households, the impact depends partly on how much income is spent on food. Lower-income consumers have less room to absorb higher prices and may have to reduce consumption or sacrifice spending on other essential needs.
Food manufacturers face a different but related challenge. Franciscus Welirang, a director of Indonesia’s PT Indofood, told Reuters that higher shipping costs were becoming more expensive in local currency terms as the rupiah weakened. Food processors renewing raw material contracts at higher prices may face pressure on profit margins or have to increase prices for consumers.
Supply availability is another concern. Reuters quoted a senior executive at an Indonesian flour-milling company, who requested anonymity because they were not authorised to speak to the media, as saying that several wheat millers were operating below capacity because cargo arrivals had fallen amid the Russia-Ukraine war.
Data from Kpler cited in the Reuters report showed that Indonesian wheat arrivals fell by 41 per cent year-on-year to 491,000 metric tonnes in September.
The report also highlighted the risk that governments facing domestic shortages could restrict food exports to protect local consumers. Such restrictions could reduce supplies available to international buyers and add further pressure to prices.
For Nigeria, the developments raise questions about exposure to international food and agricultural input costs. Higher global prices, freight charges and foreign exchange pressures can increase the cost of imported commodities and inputs. However, the scale of any domestic impact would depend on local harvests, import requirements, exchange-rate movements and distribution costs. Reuters’ report did not provide a Nigeria-specific inflation projection.
WHAT’S BEING SAID
“All this has put considerable pressure on the system.” – Maximo Torero, Chief Economist, Food and Agriculture Organization of the United Nations
“We will see a bigger impact towards the end of the year, at the beginning of next year and potentially throughout next year.” – Maximo Torero, Chief Economist, Food and Agriculture Organization of the United Nations
“Rising inflation, particularly food inflation, is a reality.” – Manish Tiwary, Chairman and Managing Director, Nestlé India
“Shipping costs have also increased and when converted into rupiah, the impact is amplified by the weakening of the Indonesian currency.” – Franciscus Welirang, Director, PT Indofood
“There is significant upside risk in prices.” – Alexander Karavaytsev, Senior Economist, International Grains Council
WHAT’S NEXT
Reuters reported that import demand could strengthen as countries that delayed purchases after favourable local harvests return to international markets to replenish supplies.
Alexander Karavaytsev, a senior economist at the International Grains Council, told Reuters that a new wave of demand could emerge within months as importers resume buying.
The outlook will also depend on harvests in major exporting countries. Although favourable wheat harvests are expected in the Southern Hemisphere, weaker-than-expected production in Australia or Argentina could put additional upward pressure on prices.
The FAO has warned Reuters that the cushion provided by previous harvests and global grain stocks is coming under pressure. This could leave markets more vulnerable to further disruptions if production falls or shipping routes become more difficult to use.
For food manufacturers and importing countries, monitoring inventory levels, freight costs, currency movements and harvest forecasts will be important as they plan purchases and manage costs.
BOTTOM LINE
Reuters’ analysis identifies a growing combination of shipping disruptions, higher agricultural input costs and weather-related risks that could intensify global food inflation into 2027. While existing grain stocks have provided some protection, pressure on those reserves and the prospect of stronger import demand could make food more expensive, particularly for lower-income consumers and countries dependent on international supplies.
Source: Reuters
