Trade

On February 2, 2026, the United States and India finalized a trade deal in which the U.S. will reduce its tariffs from 50% to 18% on merchandise imports from India. Earlier, on August 1, 2025, U.S. imposed 25% tariff on such imports (comprising a 10% baseline tariff + 15% reciprocal component). These tariffs cover around 70% of India’s exports to the U.S. Further, on August 27, 2025, an additional 25% tariff was implemented, as a penalty for Russian oil purchases, bringing the tariff rate to 50%. The measure was among the highest U.S.

The FAO Food Price Index fell in January for the fifth straight month, to nearly 23 percent below the record high seen in March 2022. Sugar, meat, and dairy prices drove the decline. The Cereal Price Index rose marginally in January but is still nearly 4 percent below its January 2025 level. Wheat prices fell 0.4 percent, with strong global supplies balancing growing demand and concerns about weather in several major producing regions. Strong supplies drove maize prices down slightly as well.

The FAO Food Price Index declined marginally in December, with prices reaching 2.3 percent below December 2024. Overall prices for 2025 remained 4.3 percent higher than 2024, however.

Understanding how food demand responds to income and price changes is essential for anticipating global food needs and expected consumption patterns, and for designing effective food policies. Two key parameters for this are the income elasticity of demand—the percent change in consumption in response to a percent change in people’s income; and the price elasticity of demand—the percent change in consumption in response to a percent food price change. These are essential inputs in a wide range of economic models.

This blog post is part of a special series based on the October 2025 Commodity Markets Outlook, a flagship report published by the World Bank. This series features concise summaries of commodity-specific sections extracted from the report. Explore the full report here.