Even though the IMF’s projections anticipate a downward trend by 2027, prices continue to put pressure on the cost of living, especially in low-income economies. Food inflation and external shocks maintain their unequal impact on a global level.
Frank González
Inflation is putting rising pressure on the cost of living around the world, with greater impact on families and lower-income nations, despite the decrease recorded in recent years and the downward trend forecast for the period 2026-2027.
International Monetary Fund (IMF) predictions indicate that overall inflation will go from 3.8% in 2026 to 3.4% in 2027; figures higher than the 2.3% in 2019, the last pre-pandemic year.
The accepted definitions of inflation refer to the general and sustained increase in the cost of goods and services in the economy, over a specific period of time.
Demand greater than supply, generated by the excess of money in circulation, or increased production and distribution costs of merchandise, is among the causes of inflationary processes.
Another cause is imported inflation, resulting from the increased costs of ingredients, raw materials, products and services from abroad, which more severely hits countries with small, open economies. This transference of inflation through international commerce is very common through the importation of raw energy such as petrol, natural gas and coal, and food items like corn, wheat and soy.
Inflation erodes consumer purchasing power, especially in low-income households, which are obliged to spend the majority of their resources on meeting basic needs, such as bills, housing and food, the sectors under the most pressure from price increases.
Food inflation merits special attention, which recorded an increase of 23.3% in 2021, as a result of the combination of four factors: the Covid-19 pandemic, the war in Ukraine, extreme meteorological events affecting crop yields and the hike in fuel prices.
The pandemic beginning in 2020 was the trigger for the uncontrolled inflationary global spiral while the world’s population was leaving lockdowns behind and making strides towards a return to normality. The imbalance between reduced supply and excessive demand was the main cause of the abrupt and massive increase in prices, mostly of food. The reason for this imbalance was the excess of money in circulation created by the relaxation of monetary policies and expansive fiscal measures implemented by governments and central banks to alleviate the social and financial fallout from the emergency.
The stimulus packages to prevent global economic collapse reached $16.9 billion, according to the IMF.
The increase in fuel costs, driven by increased demand during the stage of economic recovery, alongside the start of the war in Ukraine in 2022, set the ideal stage for the inflationary explosion between 2021-2023.
In this context, the average year-on-year inflation rate for global food prices grew from 5.8% in December 2020, to 23.3% in December 2022 and then to 13.6% in January 2023.
Food inflation has exceeded general inflation since 2020, reaching a peak divergence in January 2023 with 13.6% compared to 8.5 % respectively, according to the report “The State of Food Security and Nutrition in the World 2025.” The annual study carried out by the United Nations Food and Agriculture Organisation (FAO) and other entities within this global movement, attributes the difference to increased volatility and persistent pressures on agricultural and food markets.
Something similar occurred with relation to the distribution of the inflationary burden across countries. While in low-income countries it peaked at 30% between 2022 and 2023, in high-income countries the major turning point was around 14% in November 2022.
According to the World Bank, data for August and November 2025 indicated higher inflation of food costs in numerous low- and middle-income countries, with an index exceeding 5% in 45% of low-income nations, compared to only 9.1% in high-income nations.
In real terms, the World Bank stated, food price inflation exceeded overall inflation in 54% of the 166 countries that provided data.
Meanwhile, the FAO food price index, which measures the monthly variation of a group of major products in international markets, recorded an increase of 4.2% in December 2025, compared to the same month in 2024, despite declining for four consecutive months in the final stretch of the year. PL
(Translated by Donna Davison – Email: donna_davison@hotmail.com) – Photos: Pixabay
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