Global food inflation is expected to intensify as supply shocks pile up
SPY•Global food inflation is expected to accelerate in the coming months and persist into 2027 as shipping disruptions, higher fertiliser costs and El Niño-driven drought squeeze supplies. The FAO Food Price Index reached 136 points in September, its highest reading since November 2022.
1. Supply pressures build
War-related shipping disruptions, higher fuel and fertiliser costs, and El Niño-driven drought are tightening cereal supplies. Wheat prices are up more than 30% in 2026, while rice prices in key Asian exporting countries have risen 10% to 13%; fertiliser prices remain elevated.
2. Consumers face higher costs
Rice prices in Indonesia have reached records, sugar prices in India hit an all-time high, and unsubsidised bread in Egypt rose to around 5 Egyptian pounds per loaf from 4 pounds in July. The World Bank said food prices outpaced headline inflation in 22% of the 150 countries it analysed in the September quarter, up from 14% in the previous quarter.
3. Import demand may rise
Importers in the Middle East and Africa that held back after strong local harvests may return to global markets, potentially adding to demand. The FAO said shrinking grain-stock buffers could make commodity price increases more pronounced; Indonesian wheat arrivals fell 41% year over year to 491,000 metric tons in September.
