A New World Bank report has ranked Zimbabwe as the country with the highest food price inflation in the world despite official figures showing that price levels have been trending downwards.
The nation has over the greater part of the year been battling rising inflation and a weakening domestic currency.Official figures show that the year-on-year inflation rate for October 2022 decreased to 268.8% from 280.4% in September 2022, shedding 11.6 percentage points while the month-on-month inflation rate in October 2022 was 3.2%, shedding 0.3 percentage points on the September 2022 rate of 3.5%.
According to the latest World Bank Food Security update for November, the continuation of restrictions on fertilizer exports from the Black Sea region, sanctions on exports from Belarus, and China’s fertilizer export ban could further destabilise tight fertilizer markets.
If energy and fertilizer prices do not moderate in 2023 and 2024 as expected, food prices could increase substantially.
The report shows that Zimbabwe’s monthly food inflation increased by up to 30% this year and other countries which also reported high inflation although lower than Zimbabwe include Venezuela, conflict-hit Somalia and Lebanon.
If agricultural commodity prices increase, it is likely that the number of people facing food insecurity will continue to increase.
Following developments in food markets since the Russian invasion of Ukraine, it is projected that the number of people subject to severe food insecurity will exceed 200 million in 2022, with populations most exposed to food crises typically living in countries facing extreme weather events and conflict, especially in Sub-Saharan Africa.
Price spikes in food and agricultural commodities will affect vulnerable populations by limiting access to affordable staple foods, which can lead to widespread food insecurity. The World Bank
According to Agricultural Market Information System( AMIS), uncertainties regarding the possible expiration of the Black Sea Grain Initiative have been less of a driver of grain and oilseed future price fluctuations than in previous months.
Implied volatility, which is defined as the market’s forecast of a likely movement in a commodity’s price in wheat, is lower than in October, suggesting that the market is giving less weight to news regarding the negotiations of the Black Sea grain corridor. If the agreement were not renewed, it is likely that a price spike would be of lesser magnitude and shorter lived than movements observed in recent months.
Climate variability, which includes flooding, drought, abnormal dryness, and cyclones, in East and southern Africa, places additional pressure on food security through agricultural production and price channels.