Global food markets are facing unprecedented pressures that have pushed prices to record levels, in light of increasing supply shocks and a decline in agricultural production in major regions of the world, which portends widespread economic and social repercussions.
In Indonesia, rice prices jumped to unprecedented levels amid expectations of delayed rains, while the cost of bread in Egypt rose by a quarter. In India, sugar prices hit an all-time high as a result of the weakest monsoon season in more than a decade, which in turn led to a decline in domestic production.
Maximo Torero, chief economist at the UN Food and Agriculture Organization (FAO), warned that these factors have put enormous pressure on the global food system. “We will see a greater impact towards the end of the year, at the beginning of next year, and perhaps throughout next year,” he said, adding that the cover provided by unprecedented global grain stocks is beginning to disappear, making commodity price increases more severe.
The world’s poorest consumers are suffering the greatest losses as a result of this sharp rise, especially in low- and middle-income countries in the Middle East, North Africa and Asia, where food accounts for a larger share of household spending. World Bank data showed that food prices exceeded the general inflation rate in 22% out of 150 countries included in the analysis during the quarter ending in September, compared to 14% in the previous quarter.
In the same context, the FAO Food Price Index averaged 136 points in September, recording its highest level since November 2022. This continued rise increases the risk of social unrest and is likely to push governments in major supplier countries to impose export bans, exacerbating the shortage crisis.
There are many supply shocks that markets suffer from. Attacks on grain infrastructure in the Black Sea have disrupted wheat shipments, forcing the largest importers, Egypt and Indonesia, to search for alternative supplies. At the same time, insecurity in the Red Sea has forced ships to take longer, more expensive routes around Africa, while the US-Israeli war on Iran has raised fuel prices and disrupted fertilizer exports through the Strait of Hormuz, raising farming costs at a time when dry weather caused by El Niño is curtailing production in India and Southeast Asia.
On the commodity level, wheat prices rose by more than 30% in 2026, and rice prices in the main Asian exporting countries increased by rates ranging between 10% and 13% despite the large stocks. Although fertilizer prices have declined from the record levels they reached earlier in the war on Iran, they are still high.
In Egypt, the prices of non-subsidized bread rose to about 5 Egyptian pounds ($0.093) for a large loaf, compared to 4 pounds in July, while the price of cooking oil rose by about 40% in the Emirates, and the prices of vegetable oils in Indonesia increased by 7% despite it being the largest producer of palm oil in the world. In India, the prices of sugar, onions and pulses jumped more than 10% in September compared to the previous month due to a shortage in production. Manish Tiwari, Chairman and Managing Director of Nestlé India, pointed out that the rise in food price inflation has become a “reality” in light of a difficult operating environment represented by rising costs of primary commodities.
In turn, baker Sayed Abdel Hamid Mohamed from central Cairo explained that the crisis is not limited to flour only, adding: “If you bring skilled workers, it will cost you a lot, and the prices of electricity, water, yeast, and materials used in production have also increased.” Customer Tariq Azab confirmed that prices have been rising more and more in recent years. In addition, freight rates increased by about 50% on some major global routes, such as the route from the Black Sea to Southeast Asia, affected by rising oil prices and war risk premiums.
On the inflation front, declining domestic supplies and rising commodity costs threaten to accelerate inflation rates. Major importers in the Middle East and Africa, who temporarily refrained from buying after a strong local harvest, will be forced to return to global markets soon. “Within a couple of months, there could be a big new wave of demand as importers return to the market,” said Alexander Karavaytsev, chief economist at the International Grains Council in London.
Food manufacturers also face challenges in securing supplies in addition to rising prices, as they are forced to renew their annual contracts to purchase raw materials at higher prices, while the weakness of local currencies doubles the burden. Franciscus Welerang, a member of the board of directors of PT Indofood, the largest food company in Indonesia, confirmed that shipping costs increased and their impact doubled when converted into rupiah due to the weakness of the currency. Kpler data showed that Indonesia’s wheat imports decreased by 41%, reaching 491 thousand tons in September compared to the previous year, while wheat mills operate their units below their production capacity due to the scarcity of Russian and Ukrainian shipments.
On the other hand, soybean and corn stocks appear to be abundant at the present time, and their future supplies depend on production in the United States and South America, but the rise in oil prices has supported the two crops as a result of their increasing dependence on the biofuel sector. Karavaytsev concluded by noting that wheat crops in the Southern Hemisphere appear favorable, warning that any negative risks threatening production in exporters such as Australia and Argentina may add a new factor that supports the rise in prices, stressing the presence of “major risks of rising prices.”
