Energy Prices Are Forecast to Ease in 2027. Food Prices Are Not

For most of 2026, the commodity story has been about oil. The conflict in the Middle East pushed Brent crude from an average of $69 a barrel in 2025 to a monthly average of $116.8 in September 2026, and the World Bank's energy price index rose 25.7% in September alone. Several central banks, including the Reserve Bank of Australia on 3 November, have raised interest rates in recent weeks.

The World Bank's October 2026 Commodity Markets Outlook, published on 28 October, suggests the next phase may look different. It forecasts energy prices falling 11.5% in 2027, with Brent easing to $79 a barrel, and fertiliser prices returning to about their 2025 level. Food is the exception. The Bank expects food commodity prices to keep rising next year, and it has raised its 2027 forecasts for rice, palm oil and sugar well above what it projected in April.

That split matters for food-importing developing economies, and for anyone expecting inflation to fall when oil does. All the 2026 and 2027 figures below are World Bank forecasts, not outturns.

What the World Bank forecasts

The headline numbers are large. The Bank's overall commodity price index is forecast to rise 23.1% in 2026, led by energy (+32.0%), metals and minerals (+24.5%, with record prices for aluminium, copper and tin) and precious metals (+39.9%). It expects Brent crude to average $91 a barrel in 2026 and $79 in 2027. Its baseline assumes no major intensification of the conflicts affecting commodity supplies.

Within food, some of the largest forecast increases are for wheat and vegetable oils. The Bank projects US hard red winter wheat to average $311 a tonne in 2026 (+28.0%) and $353 in 2027 (+13.5%), and soybean oil to rise 39.0% in 2026 and a further 11.4% in 2027. Rice is forecast to rise 9.8% in 2026 and 11.6% in 2027, and the Bank has raised its 2027 rice forecast by about 21% since April and its palm oil forecast by about 15%.

Separate outturn data from the Food and Agriculture Organization (FAO), whose index is compiled independently of the World Bank's, show the same commodity groups already rising: in September 2026, the FAO Food Price Index was 5.8% higher than a year earlier, with its cereal index up 17.2% and its vegetable oil index up 18.3%.

Why food is moving differently from energy

The World Bank identifies three forces behind the 2026 rise in food prices: early effects of El Niño on tropical crops, knock-on effects of high energy prices, and attacks on maritime infrastructure that have disrupted food exports from the Black Sea. Grain prices rose about 14% between June and September, partly because of that disruption. Russia and Ukraine together supply about 30% of global wheat exports, according to the report.

Energy reaches food through two channels the Bank describes: higher energy prices raise farmers' input costs, including fuel and fertiliser, and encourage biofuel production, which adds to demand for crops such as soybeans. The Bank's 2027 forecast for oils and meals reflects demand for soy-based products for animal feed and biofuels, together with El Niño-related curbs on palm oil production.

Fertiliser, by contrast, has already turned. The Bank's fertiliser index is forecast to rise 14% in 2026 after a surge in urea prices early in the year, which has since subsided as China accelerated its exports. The Bank expects fertiliser prices to return to about their 2025 level in 2027, premised on falling energy costs.

The monthly price data show the same turn. Urea averaged $407.5 a tonne in September 2026, about 4% below its 2025 average, although the price of DAP, a phosphate fertiliser, was about 17% higher.

EconoLens Analysis: the part of the shock that outlasts oil

On the World Bank's own forecasts, food and energy part company in 2027. Energy and fertiliser prices fall back by 11.5% and 12.4%; food, grains and oils and meals keep rising. Compounded over two years, food prices end 2027 about 18% above their 2025 average, slightly ahead of energy at about 17%, and well ahead of fertilisers, which are flat.

The reason is in what drives each forecast. For 2027, the Bank's baseline already assumes that energy prices fall and that constraints on Black Sea shipping ease, and it still forecasts food prices up 7% and grain prices up 9%. It attributes the grain rise mainly to pressure on rice output in Asia and on wheat output worldwide as growing conditions worsen, in some cases because of El Niño.

The Bank sees a high probability that the 2026–27 El Niño will be the strongest since 1950, when comparable records begin. Add feed and biofuel demand for soy products, and the 2027 forecast is carried by weather and crop demand rather than by fuel costs. War in the Black Sea enters the 2027 outlook as a risk, not as part of the baseline.

The monthly data are consistent with this reading, with one caveat. In September 2026, the Bank's food price index was about 14% above its 2025 average, while its fertiliser index was only about 6% higher and urea was below its 2025 level. Fertiliser costs affect harvests with a lag, so September prices cannot rule out an effect from the urea spike earlier in the year. But the 2027 food forecast does not depend on fertiliser staying expensive, which is why cheaper fertiliser next year need not bring food prices down.

The strongest evidence against this reading comes from the same report. The Bank expects the overall effect of El Niño on food prices to be manageable, consistent with past episodes, because the weather effects are varied. It expects total grain supplies for 2026–27 to be about 3% larger than in 2024–25, even though grain output is likely to dip in 2026.

Food prices also start from a low base: they fell 21% between 2022 and 2025, and only in the Bank's adverse scenario do they rise narrowly above their 2022 level next year. A food price rise of this size is a serious cost for importers, not yet a repeat of 2022.

So the evidence supports a narrower claim than "a food crisis is coming". It supports this: if the Bank's forecasts hold, the inflationary pressure from the 2026 commodity shock shifts from fuel to food during 2027, and the economies most exposed are food importers and those where El Niño hits hardest. The Bank names fragile and low-income economies as the most exposed to El Niño.

Where the assessments disagree

The case that food prices will be contained rests on supply. Near-record supplies of staple grains restrained this year's increase, the Bank expects 2026–27 grain supplies to be larger than two years earlier, and it expects El Niño's effects to be manageable overall. Severe food insecurity was falling before this shock: the report puts it at 779 million people in 2025, down from 803 million in 2024 and 837 million in 2021.

The case that the rise will persist rests on the risks the Bank sets out. Its adverse scenario cuts Gulf oil supply by about 5 million barrels a day in the first half of 2027 and disrupts grain shipments from Russia and Ukraine on a scale comparable to Ukraine's export losses in 2022 and Russia's restrictions in 2010–11. In that case, food prices are 12% above the baseline in 2027 and grain prices 20% above it.

There are signs of strain already. Severe food insecurity, at 9.5% of the world's population in 2025, is still above its 2015–19 average of 8.1%. And the median rate of food price inflation in emerging and developing economies rose to 3.9% in the third quarter of 2026, from 3.5% the quarter before, and the Bank expects it may firm further as grain and oilseed prices feed through.

The Bank's deputy chief economist, Ayhan Kose, described commodity markets as being hit by "several major shocks at once". The report's policy message is that food trade should be kept open: trade-restrictive measures, it warns, have in the past triggered panic buying and larger increases in world prices.

Global implications

For inflation, the forecasts are a reminder that energy and food shocks unwind on different timetables. Central banks that have raised rates against oil-driven inflation will see energy's direct contribution fade if the Bank's oil forecast holds, but food may keep headline inflation above where energy alone would put it in 2027.

For public finances, the burden falls on food-importing developing economies. The World Bank Group says it has made $50–60 billion available through existing instruments, including support for social safety nets and working capital for firms and farms. How much of that is drawn will be one measure of how far the shift from fuel to food is felt.

For India, the link is less direct than the global headline suggests. India's food inflation rose to 7.74% in September 2026, from 5.97% in August, but the food items with the highest annual price increases were domestic produce such as onions, ginger, garlic and lemons, rather than the internationally traded cereals and vegetable oils at the centre of the World Bank's forecast.

Whether the global rise in those commodities reaches Indian food prices in 2027 depends on trade exposure and domestic harvests, which this article does not assess.

What happens next

• 4 December 2026: FAO Food Price Index for November 2026.
• April 2027: the World Bank's next Commodity Markets Outlook, which will show whether the 2027 food forecast has held.

The signs to watch are rice and wheat growing conditions, how strong El Niño proves over the northern winter, whether Black Sea shipping eases as the Bank assumes, and whether energy prices fall as expected. If oil falls but grain and vegetable oil prices keep rising, the divergence described here is under way. If Black Sea disruption continues into 2027, food prices move towards the Bank's adverse scenario; if harvests hold up and El Niño's effects stay contained, the 2027 food forecast is likely to be revised down.

Conclusion

The World Bank's October outlook marks a turn in this year's commodity shock. Energy and fertiliser prices are forecast to fall back in 2027, but food prices are not, because the forces the Bank expects to drive them next year, poor growing conditions for rice and wheat during a very strong El Niño and steady demand for feed and biofuels, do not depend on the price of oil. The Bank still expects these effects to be manageable, and food prices remain below their 2022 level in its baseline. But on its own forecasts, the shock that began at the petrol pump is set to end at the grocery shelf.

The data and the working

Cumulative change, 2025 to 2027: (1 + 2026 forecast) × (1 + 2027 forecast) − 1. Food: 1.103 × 1.072 − 1 = 18.2%. Energy: 1.320 × 0.885 − 1 = 16.8%. Fertilisers: 1.143 × 0.876 − 1 = 0.1%. Grains: 1.141 × 1.093 − 1 = 24.7%. Oils and meals: 1.171 × 1.078 − 1 = 26.2%. Metals and minerals: 1.245 × 0.967 − 1 = 20.4%. Precious metals: 1.399 × 0.917 − 1 = 28.3%. Total: 1.231 × 0.930 − 1 = 14.5%.

Index levels (2010 = 100, World Bank Table 1): food 109.2 in 2025 → 120.4 (2026f) → 129.1 (2027f); energy 90.0 → 118.8 → 105.1; fertilisers 138.7 → 158.6 → 138.9.

Monthly comparison (World Bank Pink Sheet, September 2026, against the 2025 annual average): food index 124.1 ÷ 109.2 − 1 = 13.6%; fertiliser index 147.0 ÷ 138.7 − 1 = 6.0%; urea $407.5 ÷ $422.7 − 1 = −3.6%; DAP $800.6 ÷ $685.2 − 1 = 16.8%; Brent $116.8 ÷ $69.0 − 1 = 69.3%. Energy index, August to September 2026: 148.9 ÷ 118.5 − 1 = 25.7%.

Severe food insecurity: 837 − 779 = 58 million fewer people in 2025 than in 2021; share 9.5% against an average of 8.1% in 2015–19, a gap of 1.4 percentage points. EMDE median food inflation: 3.9 − 3.5 = 0.4 points higher in 2026 Q3 than in Q2.

All 2026 and 2027 figures are World Bank forecasts, in nominal US dollars, made with data up to 14 October 2026. Compounding two annual-average forecasts gives the change in the annual average, not the change from December to December.

Related reading on EconoLens: the oil shock and the case for rate rises, India's September 2026 inflation, the WTO's 2026 trade forecast, and the live crude oil (WTI) and India CPI inflation indicators.

FAQ

What does the World Bank forecast for commodity prices?

In its October 2026 Commodity Markets Outlook, the World Bank forecasts its overall commodity price index to rise 23.1% in 2026 and fall 7.0% in 2027. Energy prices are forecast to rise 32.0% in 2026 and fall 11.5% in 2027.

Will food prices fall when oil prices fall?

Not on the World Bank's forecasts. It expects food commodity prices to rise 10.3% in 2026 and another 7.2% in 2027, even as energy and fertiliser prices fall. It attributes the 2027 rise mainly to poorer growing conditions for rice and wheat, partly because of El Niño, and to feed and biofuel demand for soy products.

Are fertiliser prices driving food prices up?

They do not explain the latest rise on their own. The World Bank's fertiliser index was about 6% above its 2025 average in September 2026, and urea was slightly below it, while the food index was about 14% higher. Fertiliser prices are forecast to fall 12.4% in 2027.

Is this a repeat of the 2022 food price crisis?

Not in the World Bank's baseline. Food prices fell 21% between 2022 and 2025, and only in the Bank's adverse scenario, with deeper oil and grain supply cuts, would they rise narrowly above their 2022 level in 2027.

Who is most exposed?

The World Bank names fragile and low-income economies as the most exposed to El Niño. Developing economies that import grain and vegetable oils face the direct cost of higher world prices for those foods.

Sources

• World Bank: Commodity Markets Outlook, October 2026 (data cut-off 14 October 2026), 2026-10-28
• World Bank: Commodity Prices Set to Increase by 23% in 2026 as Global Shocks Mount (press release), 2026-10-28
• World Bank: The Commodity Markets Outlook in eight charts, John Baffes and Kaltrina Temaj, 2026-10-30
• World Bank: Commodity Price Data (The Pink Sheet), October 2026, 2026-10-02
• Food and Agriculture Organization of the United Nations: FAO Food Price Index, September 2026 data released 2026-10-02, accessed 2026-11-06 before the October update (page is updated monthly)
• Ministry of Statistics and Programme Implementation, National Statistics Office (India): Press Release of Consumer Price Index on Base 2024=100 for September 2026, 2026-10-12
• Reserve Bank of Australia: Statement by the Monetary Policy Board: Monetary Policy Decision, 2026-11-03

Disclaimer: This article is for informational purposes only and does not constitute investment advice. EconoLens is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making investment decisions.