Economy

Rising energy prices pose inflation risks: World Bank

Elevated food prices, combined with recent spike in energy costs, pushing food price inflation up, report says

Ovunc Kutlu   | 22.10.2021
Rising energy prices pose inflation risks: World Bank

ANKARA

Rising energy prices pose significant inflation risks in many emerging markets and developing economies (EMDEs), according to the World Bank Group.

Stressing that energy prices jumped more than 80% this year, they are expected to increase more than 2% next year as strong demand will continue, the World Bank said in its report titled Commodity Markets Outlook: Urbanization and Commodity Demand.

Energy prices are anticipated to fall sharply in 2023 with supply increases, said the report on Thursday.

"High commodity prices, if sustained, could slow growth in energy importing countries and exacerbate food insecurity in low-income countries," the report noted.

"Elevated food prices combined with the recent spike in energy costs is pushing food price inflation up in several low-income countries, such as Ethiopia, Zambia, and Zimbabwe, as well as higher-income EMDEs, including Argentina and Turkey," it added.

In the third quarter of 2021 alone, energy prices rose by 16% from the previous quarter, with crude oil prices rising 7%, natural gas prices soaring 69%, and coal prices jumping 44%, according to the report.

The nominal price index for energy is forecast to increase by 83.4% this year. While the price index for agriculture is estimated to gain 22%, fertilizers are expected to rise 58.6%, and metals and minerals are anticipated to increase 48.5%.

Crude oil prices are estimated to average $70 per barrel in 2021, and then rise to an average of $74 per barrel in 2022, but later to decline to $65 per barrel in 2023, according to the report.

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