Global food prices, in real terms, approached an all-time high in February. They will have only gone up further since
Save time by listening to our audio articles as you multitaskFood makes up a modest share of households’ budgets in the rich world, but accounts for more than 20% of consumer spending across most of the emerging world and about 40% in sub-Saharan Africa. Prices had already risen substantially over the past couple of years, owing to interruptions to production and extreme weather.
. The cost of servicing those borrowings is rising, as central banks worldwide begin pushing up interest rates in order to check inflation. The tough economic conditions are weighing on emerging-market currencies, raising the cost of foreign-currency debt and forcing governments to drain currency reserves in order to shore up exchange rates.
Sri Lanka’s case is illustrative. Its foreign-exchange reserves shrank from more than $8bn in 2019 to around $2bn earlier this year. Though the government has sought aid from both India and China, it will almost certainly require help from theEgypt has also struggled. It imports nearly two-thirds of the wheat it consumes, the vast majority of which comes from Russia and Ukraine.
The news is not all grim. Economies that specialise in the production of the commodities most disrupted by the war stand to reap some benefit from soaring prices. Oil-exporting Gulf states will collect a windfall, which higher prices for imported foodstuffs will only partly offset. Some Latin American currencies have appreciated since the outbreak of war, in expectation of higher earnings for their oil and grain exports.