Fuel, food and gold to cost more? World Bank warns of price surge

Dubai: Households in the UAE and around the world face renewed pressure from rising fuel, food and other essential costs as global commodity prices are forecast to jump 23 per cent in 2026, according to the World Bank’s latest Commodity Markets Outlook.

The increase, driven by the Middle East conflict, disrupted grain shipments and mounting pressure on energy supplies, threatens to raise costs for consumers and businesses across economies dependent on internationally traded commodities.

For UAE residents, the implications extend beyond petrol prices. Higher global energy costs can affect transportation, imported food, logistics and everyday goods. Similar pressures face households worldwide, particularly in countries that depend heavily on imported fuel, grain and fertilisers.

The World Bank expects energy prices to rise 32 per cent this year, reversing three consecutive years of declines. Food commodity prices are forecast to increase approximately 10 per cent in 2026 and another 7 per cent in 2027.

These are forecasts for internationally traded commodities, not direct predictions of consumer inflation or supermarket prices. The impact on households will depend on local pricing, government policies and how businesses pass on higher costs.

Oil prices keep fuel, transport costs high

The World Bank forecasts Brent crude will average $91 per barrel in 2026, compared with $69 in 2025, before easing to $79 in 2027.

The increase reflects disruptions linked to the Middle East conflict, which have reduced global oil supplies and forced countries to draw down inventories.

Global oil production is projected to fall 5.2 per cent in 2026, the largest annual decline in more than four decades outside the 2020 global recession.

Consumption is also expected to contract 2.5 per cent, the third-largest annual decline on record after 1980 and 2020. Higher prices are discouraging consumption, while electrification is reducing oil demand, particularly in China.

Despite falling demand, production is expected to remain below consumption, requiring further withdrawals from inventories and leaving markets vulnerable to additional disruptions.

For UAE motorists, international oil prices are particularly relevant because domestic petrol and diesel prices are reviewed monthly in relation to global market conditions.

Businesses worldwide face similar exposure through transport, shipping and distribution costs. Higher fuel expenses can increase the cost of moving goods between countries and delivering products to shops.

Food prices to rise 18% over two years

Food affordability presents another concern for households in the UAE and globally. The World Bank expects internationally traded food commodity prices to increase approximately 10 per cent in 2026 and another 7 per cent in 2027, representing a cumulative rise of about 18 per cent.

Disrupted grain shipments are affecting international trade, while El Niño weather conditions threaten agricultural harvests. Higher fuel and fertiliser prices are also raising the cost of growing, processing and transporting food.

For UAE consumers, these developments matter because the country depends heavily on international supply chains for food products. Higher grain prices can increase import costs for wheat and other cereals, while more expensive transport and agricultural inputs can affect a wider range of groceries.

Consumers in other food-importing economies face similar pressures. The impact could be more severe in lower-income countries, where food accounts for a larger share of household expenditure.

UAE retail prices will not necessarily rise by the same percentage as global commodity prices. Local competition, supply contracts and government price controls on essential goods can influence what shoppers ultimately pay.

Fertiliser costs add risk to grocery bills

The World Bank forecasts fertiliser prices will increase 14 per cent in 2026, following a sharp rise in urea prices earlier this year. Although fertiliser prices are expected to return to 2025 levels next year, elevated agricultural input costs could continue affecting food production and pricing.

Farmers worldwide rely on fertilisers to maintain crop yields. Higher costs can eventually be reflected in wholesale food prices, creating another potential source of pressure on household grocery bills.

Metals and gold prices also heading higher

Industrial metals prices are forecast to increase 25 per cent in 2026, reaching new highs as aluminium, copper and tin prices rise amid supply disruptions and strong demand.

Investment in renewable energy, electric vehicles and data centres is contributing to that demand. For businesses in the UAE and elsewhere, higher metals prices can increase construction, electrical equipment and infrastructure costs. Whether consumers pay more depends on how suppliers pass on those increases.

Precious metals prices are projected to rise 40 per cent this year as investors seek assets perceived as safer during periods of geopolitical and economic uncertainty. That is particularly relevant to UAE residents purchasing gold jewellery or bullion, as international prices influence local retail rates.

The World Bank expects precious metals prices to moderate in 2027 but remain more than three times their 2015–2019 average.

Could prices rise even further in 2027?

The World Bank’s baseline forecast suggests overall commodity prices will decline 7 per cent in 2027, offering some relief after this year’s sharp increase.

Yet simultaneous supply disruptions could produce a more difficult outcome. In an adverse scenario, Brent crude could average $105 per barrel in 2027, while food commodity prices could rise 12 per cent above the baseline forecast, exceeding their 2022 levels.

These are risk scenarios rather than the World Bank’s central projections. The World Bank has made $50 billion to $60 billion available through existing financing instruments, including $25 billion in pre-arranged financing, to help countries manage the economic consequences.

The funding can support social safety nets, government finances and liquidity assistance for businesses and farms. For households across the world, the forecasts point to another year when international supply disruptions could influence spending on transport, groceries and everyday goods, with further pressure possible in 2027.