World Bank: The World is Entering an Era of Price Shock

The World Bank predicts the strongest price crisis in 2022 since the 1970s due to jumps in the price of energy, metals and food. This is stated in the new Commodity Market Outlook.

Experts from the World Bank predict a 50% increase in energy prices in 2022, and other goods - by 20%.

In 2023-2024, the forecast of the World Bank's Commodity Market Outlook is to reduce the price of all goods, but experts expect higher prices for the entire five-year period. It is noted that the consequences of the war in Ukraine may be longer than in previous crises. In short, the world economy has entered the strongest price commodity shock since the 1970s. Today, however, consumers have fewer opportunities to replace fossil fuels with each other, as the rise in prices now covers all market sectors.

The average annual price of Brent oil is expected to rise by 42% - up to $ 100 per barrel. It will fall to $92 in 2023 if supply disruptions stop and oil production in countries other than Russia increases, with demand rising.

Commodity Market Outlook warns of the dangers of the current practice of tax cuts and subsidies instead of taking long-term measures to reduce demand and promote alternative energy sources. This can only exacerbate supply deficits and increase price pressures on the energy market. And the forced transition to more expensive trade models, such as a change in logistics due to a change in raw material suppliers, could lead to prolonged inflation.

The expected increase in the price of gas during the year - up to 111% in Europe - leads to an increase in the price of fertilizers by almost 70%. As a result, agricultural production is becoming more expensive - including due to the abandonment of fertilizers, reduced yields and what is...