A rough global economy characterised by heightened commodity prices could last much longer much longer, the World Bank now says.
In its latest commodity prices outlook report, the lender cautions that the anticipated ease in commodity prices next year, which was further expected to stabilise in 2025, could be futile.
This is on the back of the on-going conflict-driven oil supply disruptions, which the lender says will create a significant upside risk for price forecasts.
“Commodity prices were earlier projected to fall gradually in 2024 and stabilise in 2025 on the back of the easing inflation globally,” World Bank says.
“However, global commodity markets are being reshaped in lasting ways as a result of Covid-19, the war in Ukraine and the impacts of climate change, a transformation that is likely to have profound implications for developing economies over the coming decades.”
With the latest one, Israel-Gaza conflict, oil prices were reported to have jumped in October, on concerns that the situation could disrupt output from the Middle East.
Brent crude, the international benchmark, climbed by $2.25 (Sh340.99) a barrel to $86.83 (Sh13, 128).
Israel and Palestinian territories are not oil producers but the Middle Eastern region accounts for almost a third of global supply.
World Bank says although the global economy is in a much better position than it was in the 1970s to cope with a major oil-price shock, an escalation of the latest conflict in the Middle East could push global commodity prices into uncharted waters.
This is despite a slight ease in commodity prices in October.
Energy prices eased by 1.8 per cent led by coal (-12.5 per cent) and oil (-3.4 per cent), non-energy prices were down by 1.6 per cent.
Food prices also declined by 1.7 per cent while beverages and raw materials dropped by 0.8 per cent and 1.1 per cent, respectively.
In Kenya, the Central Bank of Kenya survey shows prices of some basic food commodities including onions, green maize and rice products increased in September.
The retail prices of maize and wheat products generally moderated.
The survey further shows that weather conditions, transport and input costs continue to impact both output and the prices of key food items.
Access to government subsidised fertiliser also increased significantly to 69 per cent, up from 49 per cent in July.