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TWN Info Service on UN Sustainable Development (Aug25/01)
1 August 2025
Third World Network


UN: Poor nations bearing the brunt of rising food prices, says report
Published in SUNS #10273 dated 31 July 2025

Penang, 30 Jul (Kanaga Raja) — Global food price inflation has significantly outpaced headline inflation since 2020, peaking at 13.6 percent in January 2023, 5.1 percentage points above the headline inflation rate of 8.5 percent, according to a new report by five specialized agencies of the United Nations.

In their “The State of Food Security and Nutrition in the World 2025” report, the UN agencies said low-income countries have been particularly hit hard by rising food prices.

While median global food price inflation increased from 2.3 percent in December 2020 to 13.6 percent in early 2023, it climbed even higher in low-income countries, peaking at 30 percent in May 2023, they added.

Although both food price inflation and headline inflation rates were beginning to show signs of a downward trend by mid-2023, they remained elevated throughout the rest of the year. By 2024, food price inflation had reached its pre-COVID levels of 2019, said the report.

It said the effects of two major shocks, the COVID-19 pandemic and the war in Ukraine, combined with extreme weather events, led to a sharp increase in the price of global agricultural commodities, which reached its peak in March 2022, and fuelled also by concurrent energy price shocks.

“The combination of these shocks with unprecedented fiscal spending and relaxed monetary policies created a perfect storm, setting the stage for high food price inflation,” it underlined.

Unlike previous high inflation episodes, this one began with demand-driven factors and later evolved into supply- driven inflation, it noted.

The flagship report was published by the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD), the UN Children’s Fund (UNICEF), the World Food Programme (WFP), and the World Health Organization (WHO).

The report examines the causes and consequences of the 2021-2023 food price surge and its impact on food security and nutrition.

The report said since late 2020, domestic food retail prices have risen significantly across most countries, posing considerable challenges for both consumers and policymakers.

“Year-on-year global average food price inflation surged from 5.8 percent in December 2020 to a staggering 23.3 percent in December 2022.”

It said these figures are heavily influenced by countries that experienced hyperinflation, such as Lebanon, South Sudan, the Bolivarian Republic of Venezuela and Zimbabwe, where year-on-year inflation peaks reached levels well above 350 percent.

As a result, the report said it used the median to provide a more accurate reflection of global inflation levels: median food price inflation increased sharply from 2.3 percent in December 2020 to 13.6 percent in January 2023.

Global food price inflation has significantly outpaced headline inflation since 2020, reflecting the heightened volatility and persistent pressures within agricultural and food markets, it added.

At the onset of the COVID-19 pandemic in early 2020, overall inflation remained relatively low. Though still modest, food price inflation was significantly higher than headline inflation.

As governments began to relax stay-at-home restrictions and the global economy started the process of recovery from the pandemic, overall inflation was picking up by mid-2021.

Subsequently, the eruption of the war in Ukraine in February 2022 led to increased prices of vital farm inputs (such as fertilizers), affected the global supply of agricultural commodities, and disrupted energy markets, said the report.

“This translated into higher overall prices, with major effects on food prices. At its peak in January 2023, food price inflation was 5.1 percentage points higher than headline inflation (13.6 percent vs 8.5 percent).”

Throughout 2023, both inflation rates remained at high levels but started showing a decreasing trend, it added.

Between 2021 and 2023, food prices rose substantially faster than prices for other consumer goods and services, placing a disproportionate burden on households that spend a large share of their income on food, underscoring how food became increasingly less affordable for households relative to other goods in the economy, it said.

According to the report, after a protracted and intense period of inflation, both headline and food price indices showed signs of stabilization followed by a gradual decline in 2023.

However, it said food price inflation has been particularly acute in low-income countries. Most households, even those that depend on agriculture for their livelihoods, rely on markets for their food supplies.

Market-based food sourcing leaves households vulnerable to sharp price increases, exacerbating food insecurity and limiting access to and consumption of healthy diets, it added.

Smallholder farmers and agricultural labourers are often net food buyers, so rising food prices typically outweigh any income gains they receive from selling their produce. As a result, rising food prices not only strain household budgets, but also challenge rural livelihoods, undermining progress towards poverty reduction and food security and nutrition, said the report.

It said low-income countries experienced the most severe and sustained increases in food price inflation, with a pronounced peak between mid-2022 and mid-2023, when food price inflation rates were as high as 30 percent.

“During this period, headline inflation also spiked but remained significantly lower than food price inflation, indicating that food prices were the primary driver of cost-of-living increases.”

Even as inflationary pressures began to ease in 2024, this pervasive disparity emphasizes the challenges faced by households in low-income countries (LICs), which continue to grapple with food affordability issues, the report added.

Furthermore, lower-middle-income countries (LMICs) and upper-middle-income countries (UMICs) also saw substantial surges in food price inflation, albeit less pronounced than in LICs.

In LMICs, food price inflation peaked at around 16 percent in September 2022 before gradually declining, while UMICs saw a similar pattern with peak food price inflation nearing 20 percent in October 2022, said the report.

It said despite reductions, food price inflation remained significantly higher than headline inflation throughout the period, reflecting structural vulnerabilities in food supply chains and market dynamics in these countries.

In contrast, high-income countries (HICs) experienced relatively low levels of food price inflation, particularly before mid-2022. However, food price inflation peaked at around 14 percent in November 2022.

Although food price inflation increased during global shocks, it remained more controlled and closer to headline inflation rates in HICs compared to lower income groups, the UN agencies noted.

Recent average food price inflation (January 2024 to December 2024) stabilized at 2.7 percent, slightly above the January 2019 to January 2021 average rate of 2.1 percent.

The report said out of 203 countries, 139 experienced cumulative food price inflation exceeding 25 percent. In 49 of these, inflation surpassed 50 percent, and in 25 countries, it exceeded 100 percent.

The report cautioned that such prolonged food price pressures risk undermining household coping capacities and worsening food insecurity.

DIVERSE FACTORS

The report pointed out that the global policy response to the COVID pandemic was unprecedented, with massive fiscal and monetary interventions critical to averting economic collapse, while also laying the groundwork for the inflationary pressures that followed.

Governments mobilized around USD 17 trillion in fiscal support, with HICs deploying the bulk of this stimulus to protect jobs, sustain demand and stabilize markets. This support was equivalent to nearly 10 percent of global gross domestic product over two years, it said.

“At the same time, central banks reduced interest rates, launched large-scale bond purchases, and provided emergency liquidity to keep financial systems functioning. These actions softened the economic blow of the pandemic.”

However, the report noted that as supply chains remained strained and global demand rebounded sharply, the expansive policy environment contributed to rising inflation. Central banks eventually shifted course, tightening monetary policy to curb price surges.

The war in Ukraine, amplified by multiple extreme weather events, marked a second major global shock to food markets, disrupting trade routes, amplifying uncertainty, and reinforcing inflationary pressures set in motion by the pandemic, it further said.

“As major exporters of wheat, maize, and sunflower oil, Ukraine and the Russian Federation jointly accounted for roughly 12 percent of globally traded calories in 2021.”

Hostilities in the Black Sea region – along with additional disruptions in the Red Sea – curtailed exports of grains and fertilizers, particularly affecting LICs and middle-income countries (MICs) reliant on global cereal markets, the report said.

These geopolitical shocks compounded the inflationary effects of earlier pandemic-era disruptions, generating two distinct but reinforcing waves of agricultural commodity price surges in 2020, it emphasized.

Initial price pressures on agricultural and energy commodities stemmed from fears of supply chain breakdowns, labour shortages, and precautionary trade measures at the onset of the pandemic, pushing prices up by about 15 percentage points.

“This first surge was briefly tempered by a collapse in global demand, but resumed as economies reopened and fiscal and monetary stimuli took effect. The second, more acute price surge – adding another 18 percentage points – was triggered by the outbreak of the war in Ukraine, which disrupted critical trade flows and curtailed fertilizer exports.”

Simultaneously, energy markets, destabilized by sanctions on the Russian Federation and shifting trade patterns, saw sharp price increases that fed through to agriculture, as fuel and fertilizers became more expensive, the UN agencies said.

They noted that agricultural and energy commodity prices were key contributors to recent food price inflation.

The rapid increase in food and energy commodity prices after 2020 directly contributed to higher food price inflation, the report said, noting that food prices in 2022 and 2023 rose well above their historical trend.

“The exogenous effects of agricultural and energy shocks contributed 14 percent and 18 percent to an increase in food prices in the United States of America and the euro area, respectively, at the inflation peak (in United States the inflation peak was in the third quarter of 2022 and in the euro area it was in the first quarter of 2023).”

Broader macroeconomic conditions amplified the impact on food price inflation. When accounting for additional pressures from broader macroeconomic developments, such as commodity input costs for food producers and retailers, the estimated contribution of commodity price dynamics accounts for 47 percent and 35 percent of food price inflation in the United States of America and the euro area, respectively, said the report.

These figures underscore the significant pass-through of agricultural and energy commodity price increases to retail food prices during 2022 to 2023, it underlined.

However, commodity-driven inflation does not fully explain the extent of the price pressures observed. Actual peaks in food price inflation reached 10.6 percent in the United States of America and 15.7 percent in the euro area, pointing to other contributing factors such as rising labour costs, exchange rate fluctuations and potential increases in profit margins along the supply chain, it said.

These factors significantly contributed to food price inflation. In the United States, 53 percent of the increase was driven by markets unrelated to agricultural and energy commodities, compared to 65 percent in the euro area, the report observed.

IMPACT OF RISING FOOD PRICES

The report highlighted that food price inflation is associated with higher food insecurity and worse nutritional outcomes. It noted that the recent surge in global inflation (2021 to 2023) has had substantial adverse effects on living conditions.

The report said that global real wages decreased by 0.9 percent in 2022 as inflationary pressures intensified – consistent with evidence that large-scale economic shocks can lead to surges in inflation and a consequent decline in real wages.

It said that countries such as Myanmar and Sri Lanka have recently experienced severe socioeconomic crises.

In Sri Lanka, during the major macroeconomic crisis of 2022, poverty rates doubled from 13 percent (2021) to 26 percent (2022). Similarly, in Myanmar, the economic contraction following the 2021 military coup resulted in increases in poverty rates of 19 percent and 32 percent in urban and rural areas, respectively.

The report pointed out that previous inflationary episodes offer important lessons on recovery patterns.

During the food crises of 2007 to 2008 and 2011 to 2012, in Ethiopia, real food wages – i.e. wages adjusted for food price inflation – fell by 22 percent, worsening food insecurity and economic vulnerability.

As the economy stabilized, however, wage growth outpaced inflation, leading to a 60 percent increase in real food wages between 2013 and 2018.

A similar pattern is emerging today, with real wages beginning to recover after a sharp decline in 2022. Global real wages rose by 1.8 percent in 2023 and 2.7 percent in 2024, said the report.

However, it said many countries are experiencing sustained declines in real earnings, making it more challenging for households to meet basic food needs.

For instance, the report said that in Egypt, the heavy reliance on wheat imports from the Russian Federation and Ukraine, compounded by a severe shortage of foreign currency, has caused food prices to increase significantly faster than earnings since mid-2022.

Meanwhile, in Peru, food prices surged markedly from early 2020 to late 2023. By late 2023, workers’ earnings had increased by only 6.6 percent, while food prices had risen by 34.5 percent relative to their pre-COVID-19 pandemic (2020 Q1) levels.

Overall, the evidence underscores the fact that the recent inflationary period has placed households’ food budgets under heavy strain in some countries, the report said.

The report also said that food price increases can potentially affect households’ food security. Between 2014 and 2024, countries at different income levels experienced varying degrees of food insecurity, with notable increases coinciding with periods of food price spikes.

It said low-income countries experiencing the highest rates of food price inflation also face large increases in the prevalence of food insecurity.

This relationship has been particularly pronounced since the beginning of the current period of inflation, as food prices have risen sharply since 2020, coinciding with an accelerated increase in the prevalence of food insecurity.

It said between 2019 and 2024, the prevalence of moderate or severe food insecurity increased by 6.7 percentage points, and the prevalence of severe food insecurity by 3.5 percentage points.

The report said from a policy perspective, this trend is especially concerning as the majority of households in LICs are those most vulnerable to shocks, including sharp spikes in food prices.

“Lower-middle-income countries also experienced substantial increases in food insecurity. Although food price inflation in this group averaged 7 percent annually from 2019 to 2024 – less than the 11 percent seen in LICs – the prevalence of moderate or severe food insecurity rose by 5.6 percentage points, and of severe food insecurity by 1.6 percentage points.”

The report said that this sharp rise likely reflects the impact of conflict in several countries in this group (such as Lebanon and Myanmar), alongside broader economic pressures. Large populations in other countries affected by conflict (such as Nigeria and Pakistan) also contribute to the group’s overall rates, highlighting the complex and interlinked drivers of food insecurity across contexts.

In contrast, the report said food insecurity remained relatively unchanged in UMICs and HICs. The prevalence of moderate or severe food insecurity rose by 0.9 percentage points in HICs and declined by 1.2 percentage points in UMICs.

This could be related to several factors. For example, these countries (especially HICs) have experienced lower inflation rates, and household’s purchase capacity to afford their dietary needs has thus not been as eroded as in other regions. Additionally, higher-income countries tend to have lower levels of inequality, it said.

The analysis suggests that food insecurity in less unequal countries is not as responsive to increased food price inflation when compared to countries with high levels of inequality. Furthermore, wealthier countries tend to have stronger social protection networks and greater resources to aid their populations in times of distress, said the report.

Food price inflation is associated with higher food insecurity. A 10 percent increase in food prices is associated with a 3.5 percent rise in moderate or severe food insecurity and a 1.8 percent increase in severe food insecurity, holding all other factors constant, it added.

It also said that recent food price inflation has heightened the risk of child wasting, underscoring the profound nutritional consequences of price shocks. A 10 percent increase in food prices is associated with a 2.7 to 4.3 percent rise in wasting prevalence and a 4.8 to 6.1 percent increase in severe wasting among children under five years of age.

The effects remain robust even after controlling for access to essential services, including clean water, sanitation, and public health services, it added.

Furthermore, the report said that the surge in global food price inflation since 2022 has likely exacerbated acute malnutrition, placing millions of children in LICs and LMICs at increased risk.

From January 2022 to January 2023, global food prices rose by 13.6 percent, with inflation reaching 25.2 percent in LICs and 11.8 percent in LMICs, it noted. It said during this period, over 65 percent of LICs and 61 percent of LMICs – together home to nearly 1.5 billion people – experienced food price inflation above 10 percent.

“These regions also report higher levels of child wasting. By 2024, the prevalence of wasting was 6.4 and 9.5 percent in LICs and MICs, respectively.”

The results highlight the widespread and serious risks food price inflation poses to these particularly vulnerable populations, the report concluded. +

 


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