Global food inflation to accelerate through 2027 as supply shocks mount Food prices are rising sharply in low- and middle-income countries as war-related shipping disruptions and El Nino drought squeeze cereal supplies, with inflation expected to persist into 2027. Global food inflation is set to accelerate in the coming months and persist well into 2027 as war-related shipping disruptions and El Nino-driven drought squeeze cereal supplies. The pressure is already hitting vulnerable consumers. Muhamad Yasin, a 63-year-old parking attendant in central Jakarta, has cut back on meals as staples moved beyond his reach. I used to be able to get rice, tempeh and tofu for 7,000 to 8,000 rupiah, or 0.39 to 0.44 dollars, he said. Now it is 15,000 rupiah.Record High Rice Prices Hit JakartaHe earns 200,000 to 300,000 rupiah a week and supports four children. In Indonesia, rice prices have jumped to record highs amid forecasts of delayed rains. Bread in Egypt costs a quarter more, and sugar prices in India hit an all-time high as the weakest monsoon in over a decade curbed production. All this has put considerable pressure on the system, said Maximo Torero, chief economist at the United Nations Food and Agriculture Organization.We will see a bigger impact towards the end of the year, at the beginning of next year and potentially throughout next year. The world's poorest consumers are being hit hardest as food prices rise sharply across the Middle East, North Africa and Asia, where food takes a larger share of household spending.According to the World Bank, food prices in the September quarter outpaced headline inflation in 22 per cent of the 150 countries it analyzed, up from 14 per cent in the previous quarter. The FAO Food Price Index, which tracks monthly changes in a basket of internationally traded commodities, averaged 136 points in September, the highest reading since November 2022.Rising prices heighten the risk of social unrest and could prompt key supplier governments to impose export bans, further exacerbating shortages. Attacks on Black Sea grain infrastructure have disrupted wheat shipments, forcing top importers Egypt and Indonesia to seek alternative supplies. Red Sea insecurity diverts vessels onto longer, costlier routes around Africa.Wheat and Fertilizer Costs Surge Amid ConflictThe U.S.-Israeli war on Iran has raised fuel prices and disrupted fertilizer exports through the Strait of Hormuz, driving up farming costs even as dry El Nino weather reduces output in India and Southeast Asia. Wheat prices are up more than 30 per cent in 2026, while rice prices in key Asian exporting countries have risen 10 per cent to 13 per cent despite large inventories. Fertilizer prices are off peaks reached earlier in the Iran war but remain elevated.Rising inflation, particularly food inflation, is a reality, said Manish Tiwary, chairman and managing director of Nestle India, citing a challenging environment due in part to higher commodity costs. In Egypt, prices of unsubsidised bread have risen to around 5 Egyptian pounds, or 0.093 dollars, for a big loaf from 4 pounds in July. Cooking oil in the United Arab Emirates has climbed about 40 per cent.Vegetable oil in Indonesia has jumped 7 per cent this year, even though the country is the world's biggest palm oil producer. Prices of sugar, onions and pulses in India jumped more than 10 per cent in September from a month earlier due to production shortfalls. For baker Sayed Abdel Hamid Mohamed in downtown Cairo, it is not just the price of flour. If you bring in a skilled worker, it costs you a lot, he said.Electricity, water, yeast and the materials we use to produce the loaf of bread for consumers have all risen. Tarek Azab, a customer at the bakery, said prices have been continuously rising, not once, twice, or three times, in the past few years. Freight rates have risen about 50 per cent on some key global routes such as the Black Sea to Southeast Asia as oil prices and war premiums surge.Dwindling Grain Inventories Threaten Supply BuffersWhile food prices have been rising since late 2025, dwindling local supplies and higher commodity costs feeding through to consumers threaten to accelerate inflation. Key importers in the Middle East and Africa that held off on buying after strong local harvests now need to return to world markets, potentially triggering a surge in demand.In a couple of months, there could be a significant new wave of demand as importers return to the market, said Alexander Karavaytsev, a senior economist at the International Grains Council in London. The cushion from record global grain inventories is wearing thin, the FAO's Torero said. Stocks and good harvests in previous seasons have provided a buffer, but those buffers are starting to come under pressure, he said. That means commodity price increases could become more pronounced.Food processors that typically buy raw materials on three- to six-month contracts are now renewing those deals at higher prices, with weaker local currencies magnifying the costs. Shipping costs have also increased and when converted into rupiah, the impact is amplified by the weakening of the Indonesian currency, said Franciscus Welirang, a director of PT Indofood, the country's largest food company. On top of higher prices, food processors are experiencing difficulties in securing supplies, traders said.Several wheat millers in Indonesia are running their units below capacity as the Russia-Ukraine war has reduced cargo arrivals, said a senior executive at a flour milling company in Jakarta who did not want to be named as they were not authorized to speak to the media. Indonesian wheat arrivals dropped 41 per cent to 491,000 metric tons in September from a year earlier, Kpler data showed.For now, soybean and corn inventories are ample, with future supplies hinging on production in the US and South America, although higher oil prices have supported both crops. High global energy prices may also hurt the inflation outlook, Bank of Canada governor said. Canada's immigration levels could soon be increased, while federal funding for rare disease research was confirmed as other questions remained unanswered.