Global food inflation is poised to accelerate in the coming months and persist well into 2027, as war related shipping disruptions and El Nino driven drought squeeze cereal supplies, Reuters reported in an analysis published on Monday. In Indonesia, rice prices have already jumped to record highs amid forecasts of delayed rains, the cost of bread in Egypt has risen by a quarter, and sugar prices in India hit an all time high as the weakest monsoon in over a decade curbed production. “All this has put considerable pressure on the system,” said Maximo Torero, chief economist at the United Nations Food and Agriculture Organization. “We will see a bigger impact towards the end of the year, at the beginning of next year and potentially throughout next year.”
The aggregate data support the warning. The FAO Food Price Index averaged 136 points in September, the highest reading since November 2022, and according to the World Bank, food prices in the September quarter outpaced headline inflation in 22 percent of the 150 countries it analysed, up from 14 percent in the previous quarter. The world’s poorest consumers are being hit hardest, as food accounts for a larger share of household spending in low and middle income countries across the Middle East, North Africa and Asia. Rising prices also heighten the risk of social unrest and could prompt governments that are key suppliers to impose export bans, further exacerbating shortages.
The supply shocks are multiple and simultaneous. Attacks on Black Sea grain infrastructure have disrupted wheat shipments, forcing top importers Egypt and Indonesia to seek alternative supplies, while Red Sea insecurity diverts vessels onto longer, costlier routes around Africa. The war on Iran has raised fuel prices and disrupted fertiliser exports through the Strait of Hormuz, driving up farming costs even as dry El Nino weather reduces output in India and Southeast Asia. Wheat prices are up more than 30 percent in 2026, rice prices in key Asian exporting countries have risen 10 to 13 percent despite large inventories, and fertiliser prices, while off earlier peaks, remain elevated. Freight rates have risen about 50 percent on some key routes, such as the Black Sea to Southeast Asia, as oil prices and war premiums surge.
The pass through is reaching processors and shelves. Food processors that typically buy raw materials on three to six month contracts are now renewing those deals at higher prices, with weaker local currencies magnifying the costs, and several wheat millers in Indonesia are running below capacity as cargo arrivals fall: Indonesian wheat arrivals dropped 41 percent to 491,000 metric tons in September from a year earlier, on Kpler data. In Egypt, unsubsidised bread has risen to around 5 Egyptian pounds for a big loaf from 4 pounds in July, cooking oil has climbed about 40 percent in the United Arab Emirates, and sugar, onions and pulses in India jumped more than 10 percent in September from a month earlier. Key importers in the Middle East and Africa that held off buying after strong local harvests now need to return to world markets. “In a couple of months, there could be a significant new wave of demand as importers return to the market,” said Alexander Karavaytsev, a senior economist at the International Grains Council. Soybean and corn inventories remain ample for now, with future supplies hinging on production in the United States and South America, although higher oil prices have supported both crops through biofuel demand.