(Yicai Global)April 28 -- Global commodity prices are expected to plunge at the fastest clip this year since the Covid-19 pandemic began, according to the World Bank.

After rising by 45 percent last year, prices of raw materials are expected to fall by 21 percent this year and remain mostly stable next year, the international financial institution that grants loans to low-income countries said in its latest outlook report released yesterday.

The surge in food and energy prices amid the Russia-Ukraine conflicts has largely passed due to slowing economic growth, a moderate winter, and reallocations in commodity trade, according to Indermit Gill, chief economist at the Washington, D.C.-headquartered lender.

The moves have helped reduce global headline inflation, per Ayhan Kose, deputy chief economist. But central bankers need to remain vigilant as weaker-than-expected oil supply, a more commodity-intensive recovery in China, an intensification of geopolitical tensions, or unfavorable weather conditions could reignite inflationary pressures, he added.

Food prices could drop by 8 percent in 2023 and further decline by 3 percent in 2024 but the real prices in 2023 will remain at the second-highest level since 1975, only behind the high-inflation year of 2022. More than 349 million people around the world are predicted to face food insecurity or a lack of consistent access to nutrition this year, double that of 2020, due to high food and fertilizer prices, conflicts, as well as economic and climate shocks.

Energy prices are expected to decrease by 26 percent this year. Prices of Brent crude oil are forecast to average USD84 per barrel, down 16 percent from the average of last year.

Prices of metals and minerals are predicted to fall by 8 percent this year, and slide by 3 percent next year. Global demand in manufacturing is expected to remain weak, and China’s recovery is expected to be heavily reliant on service demand growth.

However, in the longer term, the demand for some metals, such as lithium, copper, and nickel, could rise significantly because of the energy transition, said Valerie Mercer-Blackman, lead economist of the prospects group.

Editor: Emmi Laine, Xiao Yi