How do wars, tariff disputes and currency fluctuations affect the international trade in agricultural products? Poor countries suffer disproportionately from inflation risks and food insecurity.
Consumers around the world have seen food prices going up ever since the outbreak of the COVID-19 pandemic. While food price inflation has slowed more recently, concerns over the rising cost of living have not gone away. Why is this and should we expect the cost of our daily meals to go up even more in the foreseeable future?
Global food price shocks
International markets for food have been under severe pressure owing not only to the supply disruptions caused by the COVID-19 lockdowns, but also by geo-political conflict, particularly the war in Ukraine, and extreme weather affecting major producing areas, such as the 2023 floods in India. These events have caused rising and more volatile international prices for basic staple foods such as wheat, rice, maize, vegetable oils and meat and dairy products.
The UN Food and Agriculture’s food price index, which is a composite of the prices for these internationally traded staple foods, shows a strong upward but volatile trend since 1990 (Figure 1). While the COVID pandemic provoked a global recession in 2020, disruptions in food supply chains started putting some upward pressure on prices. Food price inflation accelerated, however, with the global economic recovery from 2021, including the recovery in consumer demand helped by government stimulus programs. This, together with persistent supply chain disruptions, pushed up energy prices and with it also prices of agricultural commodities.
During 2022, food prices rose well above their historical trend following Russia’s invasion of Ukraine. Both countries are important producers of staple foods (wheat, maize, sunflower and other oil seeds) and, in the case of Russia, of fertilizers (Vos et al. 2023).
The price spikes were exacerbated by severe droughts affecting harvests in major production areas in the United States’ Midwest and Canada’s Western Provinces in 2022, as well as by export restrictions imposed by many countries on certain food products and fertilizers (Martin et al. 2024). In the latter half of 2022, several of these pressures tapered off, allowing prices in international markets to come down temporarily. The lifting of most sanctions and bans on food and fertilizer trade in mid-2022, for instance, helped recovery in internationally traded staple food supplies and led to a drop in international prices.
The US trade war
The impacts of the trade war initiated by the United States in 2025 are as yet uncertain (see e.g. Piñeiro et al. 2025). Tariff increases are also affecting agricultural and food commodities, raising – in first instance – the cost of food in the US. It is too early to foresee the effects on other countries, but indications are that the new protectionism in the United States is leading many net food exporters (like Brazil and Argentina) to other markets, as much as that the tariff increases (on all products) are likely to slow global economic growth. Both could have a dampening effect on food prices for net food importing countries, but at the cost of weaker income-earning opportunities.
At the same time, however, continuation of the war in Ukraine has kept markets for wheat, maize and fertilizers tight, while floods in India and other parts of South Asia pushed up international prices of rice. This year, 2025, the United States dollar strongly weakened relative to other major currencies. Since by far most of international commodity trade is in US dollars, a weaker dollar means higher commodity prices, as traders ask for a higher nominal price when the value of the dollar drops. For now, this has resulted in a renewed upward trend in international food prices as can be seen in Figure 1, keeping prices high by historical standards.
What does it mean for consumers and food security?
Consumers do not always immediately feel the consequences of these market trends, because most of the food people around the world consume comes from domestic providers. Yet, the multiple shocks have pushed up the price of food for consumers worldwide. During 2021 and 2022, the global food and energy price shocks caused by the COVID-related supply disruptions and the war in Ukraine have accounted for 47 percent of the increases in consumer food prices in the United States and 35 percent of the increase in the countries of the Euro area, according to a recent analysis by various UN organizations (FAO et al. 2025). This also shows that international food price fluctuations are not fully transmitted to domestic prices.
Consumers in low-income countries have been disproportionally hit by rising food prices since the outbreak of COVID. While the average global food price inflation rate increased from 2.3 percent in December 2020 to over 14 percent by January 2023 to subsequently cool to 4.5 percent in August 2025, low-income countries experienced significantly steeper increases, with annual inflation rates peaking at more than 50 percent in August 2024, while hovering around 25 percent or more since early 2023 (see Figure 2). Inflation rates in middle-income countries have also remained well above the rates felt in high-income countries but have come down from two-digit to one-digit levels over the past two years.
Domestic factors and food price spikes
While in part fueled by global price trends, domestic factors have exercised a strong influence, which also explain large disparities in inflation rates across developing countries.
Conflict and related disruptions in food production and distribution have caused food price spikes in several low-income countries, but especially in Ethiopia, Haiti, Sudan, and South Sudan. In Sudan, for instance, protracted civil strife has caused food shortage, fueling food price inflation, which peaked at almost 600 percent in early 2021 and, although official data are no longer published, are estimated to have remained well over 50 percent since. According to the World Food Programme’s (WFP) market monitor, the cost of a local food basket had surged by 153 percent in August 2024 compared with its cost the year before. Renewed political tensions in South Sudan have pushed food inflation to well over 100 percent from the end of 2023 to date.
In many more countries, fiscal and monetary policy responses to the COVID pandemic and other shocks have amplified inflationary pressures. Fiscal stimuli and monetary expansion to counteract the economic downturn caused by COVID and other shocks reignited food demand while food supplies still suffered disruptions and also weakened national currencies causing import cost to rise. Together this created a strongly inflationary environment, not just for food, but for all goods and services.
Income growth has generally lagged price increases during the 2021 to 2023 period of high food price inflation eroding purchasing power for consumers (ILO 2024, FAO et al. 2025), especially in low- and middle-income countries. Wage recovery has been uneven across countries, with only few experiencing wage growth keeping pace with rising food prices. Most others saw real incomes decline. The ILO (2024) found that, even though in more than half of 160 countries surveyed minimum wages had increased in 2023 and 2024, in most cases the increments were not large enough to compensate for the declines in the previous two years.
These trends have undermined household purchasing power, affecting the food security of low-income households, in particular. FAO et al. (2025) estimate that a 10 percent increase in domestic food prices is associated with a 3.5 percent rise in the number of people suffering food insecurity. As we have seen, food inflation in low-income countries has been well over 10 percent since 2021 and food inflation in middle-income countries also was in the double digits, making it a major cause of the rise in global hunger by more than 45 million people during 2021-2022 (FAO et al. 2025).
In 2024, with subsiding (food) inflation and some recovery of households purchasing power in large parts of the world, global hunger numbers also have come down from 695 million in 2022 to an estimated 673 million in 2024 (FAO et al. 2025). However, the inflation risk to food security remains in many low-income countries, especially in conflict-affected countries. Many of the countries at risk are in Africa, where the number of people facing hunger increased to 307 million in 2024, up from 273 million in 2022.
Will the cost of food remain high?
Food price inflation rates have fallen substantially from their highs of a few years ago. While at a much more moderate pace, most consumers around the world still see prices increasing. Does this augur for ever more expensive food in the future?
Since the world produces more than enough food to feed everyone (see e.g., Martin & Vos 2024), one might think this need not be the case. However, because of frequent supply disruptions and unequal access to food and other resources around the globe, shortages occur causing food price shocks, sometimes globally, more often locally, especially in low- and middle-income countries. Moreover, the effects of climate change and insufficient investments in new agricultural technologies have led to a notable slowdown in productivity growth (Martin & Vos 2024), forming a more structural factor causing upward pressures on food prices.
Furthermore, food systems are responsible for one third of global greenhouse gas emissions and major contributors to erosion of soil and water quality, and loss of biodiversity. This makes transformative changes imperative, both to make food systems more climate resilient and reducing their adverse environmental footprints (Bezner Kerr et al. 2022). Without such change, food production will only face increased challenges.
Investing in resilient agrifood systems worldwide will be essential to stem those structural sources of food price inflation and volatility. But such investments will also come with a cost, as they would require governments around the world to greatly increase spending on research and development, infrastructure, and incentives to farmers and agrifood businesses to adopt climate resilient and emission-reducing technologies, sustainable land and water management practices, improving storage, transportation and supply chain efficiency. This will only work if a sustained long-term effort is made.
Over time, it should help bring down the cost of food again, but for the foreseeable future, we should expect the price of our food to remain volatile and increasing. In the short run, policy makers in major producing countries should learn the lessons from recent and earlier episodes of restricting exports when food prices are rising. Even while they are well-intended to protect consumers at home against food inflation, such restrictive trade policies tend to backfire, exacerbating price shocks in global markets (Martin et al. 2024).
For food-importing countries, trade is a stabilizing factor during episodes of global or domestic supply shocks. However, free flowing trade is no panacea either. More stable food markets and adequacy in food supply and access will depend on creating more productive, resource efficient, and climate resilient food systems.
Rob Vos is Senior Research Fellow at International Food Policy Research Institute (IFPRI), Washington
References:
Bezner Kerr, R., T. Hasegawa, R. Lasco, and others, 2022. Food, Fibre, and Other Ecosystem Products. In: Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 713–906, https://www.ipcc.ch/report/ar6/wg2/chapter/chapter-5/
FAO, IFAD, UNICEF, WFP, and WHO. 2025. The State of Food Security and Nutrition in the World 2025. Rome: Food and Agriculture Organization of the United Nations. https://openknowledge.fao.org/bitstreams/e612e779-ec47-44c2-a3e0-499569c3422d/download
ILO. 2024. Global Wage Report 2024-25. Geneva: International Labour Organization. https://www.ilo.org/publications/flagship-reports/global-wage-report-2024-25-wage-inequality-decreasing-globally
Martin, Will and Vos, Rob. 2024. The SDGs and food system challenges: Global trends and scenarios toward 2030. IFPRI Discussion Paper 2237. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/138940.
Martin, Will, Mamun, Abdullah, Minot, Nick, and Vos, Rob. 2024. Trade policy and food price volatility: Beggar thy neighbor or beggar thyself? IFPRI Blog Research Post. June 7. https://www.ifpri.org/blog/trade-policy-and-food-price-volatility-beggar-thy-neighbor-or-beggar-thyself/
Piñeiro, Valeria, Gianatiempo, Juan Pablo, Traoré, Fousseini, and Glauber, Joseph. 2025. New U.S. tariff policies: What’s at stake for sub-Saharan Africa? IFPRI Blog Issue Post. May 6. https://www.ifpri.org/blog/new-u-s-tariff-policies-whats-at-stake-for-sub-saharan-africa/
Vos, Rob, Glauber, Joseph, and Laborde, David, 2023. Is food price inflation really subsiding? IFPRI Blog Issue Post. January 24. https://www.ifpri.org/blog/food-price-inflation-really-subsiding/