Global energy prices will ease in the next couple of years but "remain considerably" higher than the historic average, said a report on Wednesday.
In many economies, prices in domestic-currency terms remain elevated because of depreciation and this could deepen food and energy crises.
"As the global growth slowdown intensifies, commodity prices are expected to ease in the next two years, but they will remain considerably above their average over the past five years. Energy prices are expected to fall by 11 per cent in 2023 and 12 per cent in 2024," said the Commodity Markets Outlook report for October 2022 released by the World Bank.
However, "prices will remain more than 50 per cent above their five-year average through 2024."
Brent crude oil is expected to average at $92 per barrel in 2023, over $30 per barrel higher than the average of the last five years of $60 per barrel, said the report. In 2024, the average Brent crude oil is expected to cost $80 per barrel.
Natural gas and coal prices will become cheaper in 2023, but Australian coal and US natural gas are expected to double their average of the last five years. Separately, low grain supplies in 2023 could result in high inflation.
"First, export disruptions by Ukraine or Russia could again interrupt global grain supplies. Second, additional increases in energy prices could exert upward pressure on grain and edible oil prices. Third, adverse weather patterns can reduce yields; 2023 is likely to be the third La Niña year in a row, potentially reducing yields of key crops in South America and Southern Africa," said John Baffes, senior economist at the World Bank’s Prospects Group.
"Higher-than-expected energy prices could pass through to non-energy prices, especially food, prolonging challenges associated with food insecurity," the report said.
Almost all regions in the world saw double-digit food inflation in the first three quarters of 2022. India's food inflation in September was recorded at 8.6 per cent year-on-year (YoY) with vegetable and spice prices rising 18.5 per cent and 16.88 per cent respectively.
"A further spike in world food prices could prolong the challenges of food insecurity across developing countries. An array of policies is needed to foster supply, facilitate distribution, and support real incomes," said Pablo Saavedra, the World Bank’s vice president for Equitable Growth, Finance, and Institutions in the report's press release.
"Policymakers in emerging markets and developing economies have limited room to manage the most pronounced global inflation cycle in decades. They need to carefully calibrate monetary and fiscal policies, clearly communicate their plans, and get ready for a period of even higher volatility in global financial and commodity markets," said Ayhan Kose, director of the World Bank’s Prospects Group and chief economist at EFI, which produces the Outlook report.