Miller Magazine Issue: 156 December 2022

28 MILLER / DECEMBER 2022 NEWS The shrinking value of the currencies of most developing economies is driving up food and fuel prices in ways that could deepen the food and energy crises that many of them already face, according to the World Bank’s latest Commodity Markets Outlook report. In U.S. dollar terms, the prices of most commodities have declined from their recent peaks amid concerns of an impend- ing global recession, the report documents. From the Russian invasion of Ukraine in February 2022 through the end of Sep- tember, the price of Brent crude oil in U.S. dollars fell near- ly 6 percent. Yet, because of currency depreciations, almost 60 percent of oil-importing emerging-market and developing economies saw an increase in domestic-currency oil prices during this period. Nearly 90 percent of these economies also saw a larger increase in wheat prices in local-currency terms compared to the rise in U.S. dollars. Elevated prices of energy commodities that serve as inputs to agricultural production have been driving up food prices. During the first three quarters of 2022, food-price inflation in South Asia averaged more than 20 percent. Food price infla- tion in other regions, including Latin America and the Caribbe- an, the Middle East and North Africa, Sub-Saharan Africa, and Eastern Europe and Central Asia, averaged between 12 and 15 percent. East Asia and the Pacific has been the only region with low food-price inflation, partly because of broadly stable prices of rice, the region’s key staple. “Although many commodity prices have retreated from their peaks, they are still high compared to their average level over the past five years,” said Pablo Saavedra, the World Bank’s Vice President for Equitable Growth, Finance, and Institutions. “A further spike in world food prices could prolong the chal- lenges of food insecurity across developing countries. An ar- ray of policies is needed to foster supply, facilitate distribution, and support real incomes.” Since the outbreak of the war in Ukraine, energy prices have been quite volatile but are now expected to decline. Af- ter surging by about 60 percent in 2022, energy prices are projected to decline 11 percent in 2023. Despite this moder- ation, energy prices next year will still be 75 percent above their average over the past five years. The price of Brent crude oil is expected to average $92 a barrel in 2023—well above the five-year average of $60 a barrel. Both natural gas and coal prices are projected to ease in 2023 from record highs in 2022. However, by 2024, Aus- tralian coal and U.S. natural-gas prices are still expected to be Currency depreciations risk intensifying food crisis in developing economies