The World Bank predicts the strongest price crisis in 2022 since the 1970s due to jumps in the price of energy, metals and food. This is stated in the new Commodity Market Outlook.

Experts from the World Bank predict a 50% increase in energy prices in 2022, and other goods – by 20%.

In 2023-2024, the forecast of the World Bank’s Commodity Market Outlook is to reduce the price of all goods, but experts expect higher prices for the entire five-year period. It is noted that the consequences of the war in Ukraine may be longer than in previous crises. In short, the world economy has entered the strongest price commodity shock since the 1970s. Today, however, consumers have fewer opportunities to replace fossil fuels with each other, as the rise in prices now covers all market sectors.

The average annual price of Brent oil is expected to rise by 42% – up to $ 100 per barrel. It will fall to $92 in 2023 if supply disruptions stop and oil production in countries other than Russia increases, with demand rising.

Commodity Market Outlook warns of the dangers of the current practice of tax cuts and subsidies instead of taking long-term measures to reduce demand and promote alternative energy sources. This can only exacerbate supply deficits and increase price pressures on the energy market. And the forced transition to more expensive trade models, such as a change in logistics due to a change in raw material suppliers, could lead to prolonged inflation.

The expected increase in the price of gas during the year – up to 111% in Europe – leads to an increase in the price of fertilizers by almost 70%. As a result, agricultural production is becoming more expensive – including due to the abandonment of fertilizers, reduced yields and what is available on the market. The price of food will jump by 23% on average, and of wheat – over 40%.

The rise in palm oil is expected to be the strongest – by more than 45%, due to Indonesia’s ban on its exports from the country on April 28, due to a shortage in the domestic market. Indonesia is responsible for half of the world’s production of palm oil.

The forecast for 2023 is a 10% reduction in food prices through an increase in wheat supplies from Argentina, Brazil and the United States.

Under the changed conditions, the replacement of fossil energy resources with clean energy sources is slowing down. To a large extent, the reason is the jump in the price of aluminum needed for alternative energy – an estimated increase of 37% for the year, and nickel – an increase of 51%. The forecast for metals, in general, is an increase of 16%, iron, copper, nickel and aluminum by over 22%, but precious metals such as gold, platinum, silver will rise by only 3%.