Table of Contents
- Global Commodity Prices Forecast
- Economic Influences on Prices
- Impact on Global Inflation
- Opportunities for Developing Economies
- Importance of Fiscal Reforms
The World Bank Group predicts that global commodity prices will fall to their lowest levels in six years by 2026, marking the fourth consecutive year of decline.
According to the latest Commodity Markets Outlook, prices are expected to decrease by 7% in both 2025 and 2026 due to sluggish economic growth, an increasing oil surplus, and uncertainty in policy.
While declining energy prices are alleviating global inflation, and lower prices for rice and wheat are decreasing food costs in several developing nations, commodity prices are still higher than pre-pandemic levels.
For 2025 and 2026, commodity prices are projected to be 23% and 14% above 2019 levels, respectively, as reported by the Bretton Woods institution.
Indermit Gill, the World Bank’s Chief Economist and Senior Vice President for Development Economics, highlighted that the drop in energy prices has played a significant role in reducing global consumer-price inflation.
“However, this relief will be temporary,” Gill cautioned. “Governments should utilize this time to stabilize their fiscal situations, prepare their economies for business, and enhance trade and investment.”
Ayhan Kose, the World Bank’s Deputy Chief Economist, mentioned that lower oil prices present a chance for developing economies to implement fiscal reforms that foster growth and job creation.
The director of the Prospects Group urged nations to eliminate costly fuel subsidies to reallocate resources towards infrastructure and human capital, generate employment, and boost long-term productivity.
Such reforms, according to the official, would facilitate a transition from consumption to investment, rebuilding fiscal space while promoting sustainable job creation.
Frequently Asked Questions
What are the main reasons for the decline in global commodity prices?
The decline is primarily due to weak economic growth, a growing surplus of oil, and uncertainty in policy.
How do falling energy prices affect global inflation?
Falling energy prices help to ease global inflation, as they contribute to lower overall consumer prices.
What should governments do in response to these commodity price changes?
Governments should take advantage of the current situation to stabilize their fiscal policies, prepare their economies for business, and enhance trade and investment opportunities.
