…..Plunging prices forecast to ease inflation but threaten export-dependent economies
April 30, 2025
By InvestAdvocate
Lagos (INVESTADVOCATE)-Global commodity prices are set to decline to their lowest levels since 2020 by 2026, according to the World Bank Group’s latest Commodity Markets Outlook, signaling a dramatic shift that could ease inflationary pressures but imperil growth prospects for many resource-dependent nations.
The report forecasts a broad-based decline across key commodity categories. Energy and food prices are projected to fall by 12% in 2025, followed by an additional 5% drop in 2026.
Notably, energy prices are expected to tumble 17% this year alone, reaching a five-year low, with further declines of 6% anticipated the following year. Brent crude oil, a global benchmark, is predicted to average just $64 per barrel in 2025—down $17 from 2024—and fall further to $60 in 2026.
Food prices are also on a downward trajectory, with the Bank projecting a 7% decrease in 2025 and a modest 1% dip in 2026. The sustained decline, the report suggests, could temper near-term inflation risks, especially those emanating from escalating global trade barriers.
“Higher commodity prices have been a boon for many developing economies, two-thirds of which are commodity exporters,” said Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank Group. “But we’re now seeing the highest price volatility in more than 50 years. The combination of high volatility and low prices spells trouble.”
Gill urged policymakers in developing economies to reinforce macroeconomic resilience. “They must restore fiscal discipline, cultivate a more business-friendly environment to attract private capital, and liberalize trade wherever feasible,” he said.
Echoing this sentiment, Ayhan Kose, Deputy Chief Economist and Director of the World Bank’s Prospects Group, noted the tumultuous price swings that have defined the decade. “Commodity prices have whipsawed throughout the 2020s—plummeting with the onset of COVID-19, surging after Russia’s invasion of Ukraine, and now entering a sustained decline,” Kose said.
“Successfully navigating these gyrations will require developing nations to build fiscal buffers, strengthen institutions, and foster environments conducive to investment and job creation,” he added.
