World Bank: Global commodity prices to drop to six-year low by 2026  

The twin forces of slowing economic growth and abundant oil supply are set to drive prices down by 12% in 2025 and another 5% in 2026.

In real terms, adjusted for inflation, commodity prices will likely dip below the average recorded between 2015 and 2019, officially ending a post-pandemic boom that was supercharged by Russia’s 2022 invasion of Ukraine.

According to the Bank, while the drop may help ease inflationary pressures caused by rising trade barriers, it also threatens to stall growth in two-thirds of developing economies, many of which rely heavily on commodity exports.

“We’re now seeing the highest price volatility in over 50 years. The combination of high volatility and falling prices spells trouble,” said Chief Economist at the World Bank Group, Indermit Gill.

Gill outlined three urgent steps for developing countries to weather the storm: restore fiscal discipline, improve the business environment to attract private capital, and liberalize trade where feasible.

The World Bank noted that energy prices, which helped stoke global inflation in 2022, have been steadily falling since 2023, and that trend is expected to accelerate.

The Bank projected that food prices are to drop 7% in 2025 and 1% in 2026, but added that the fall offers little comfort in regions ravaged by conflict.

According to the UN, over 170 million people across 22 countries are expected to face acute food insecurity this year. While cheaper food commodities may ease costs for aid organizations, they won’t fix the root causes of hunger.

The World Bank warns that the extreme price swings of the 2020s may not be a fluke. Between COVID-19, geopolitical crises, and climate shocks, the boom-bust cycle in commodity markets has become faster and more disruptive.

The average cycle, which used to last about four years, has now halved in duration.

Deputy Chief Economist at the World Bank, Ayhan Kose, added that this may be the new normal, urging developing economies to build fiscal buffers and invest in strong institutions to ride out the volatility.