World Faces Fresh Food Price Surge: FAO Warns of Iran War and El Nino Impact

Rome, August 5, 2026 — The world is on the verge of another bout of food inflation as wars in Iran and Ukraine along with El Nino create a perfect storm of higher costs and lower crop yields, the chief economist of the United Nations Food and Agriculture Organization (FAO) has warned — a forecast with direct implications for Bangladesh's food security and inflation trajectory.

Food prices were a key driver of the 2022 global inflation surge but have been relatively benign so far this year, even tempering in some places the surge caused by high energy costs. This calm is likely to be temporary, however, as higher crude oil prices, the loss of fertiliser from the Gulf region, the shortage of diesel in some parts of the world, and extreme weather are feeding into a renewed food price surge that could hit consumer prices by year-end.

💬 FAO Chief Economist: Price Surge Coming

"I expect that commodity prices will start to increase more now ... and food prices will start increasing by the end of the year, and next year for sure they will increase more," Maximo Torero, FAO chief economist, told Reuters. "The transmission from the commodity to the final food price is around three to six months."

Although some commodity prices, such as wheat, maize, and rice, have increased in recent months, most of the impact on final food prices has not yet been felt. The 3-6 month transmission lag means that the commodity price increases driven by the Iran war and El Nino will begin hitting consumer food prices in late 2026 and early 2027 — a timeline that gives governments a limited window to prepare.

🚢 Strait of Hormuz: An Agricultural Chokepoint

"The Strait of Hormuz is a problem that affects all the inputs of agricultural commodities, agricultural systems," Torero said. "Brent oil, because it's used for pumping, packaging, processing, and transportation. And natural gas because it's used for fertilisers."

Meanwhile, the damage inflicted by Ukraine on Russia's oil and gas infrastructure curtails the export market for diesel and natural gas, both of them key inputs in food production. The combination of Middle East and Eastern European supply disruptions means that the global food production system is facing simultaneous shocks to its energy inputs, fertiliser supply, and shipping routes — a combination not seen since the 2022 food crisis.

📊 Key Factors Driving the Surge

• ⛽ Higher crude oil prices: Used for pumping, packaging, processing, transportation
• 🌿 Fertiliser supply disruption: Natural gas from Gulf region blocked by Hormuz closure
• 🚚 Diesel shortage: Ukraine attacks on Russian infrastructure curtail diesel exports
• 🌡️ El Nino weather: Extreme weather reducing crop yields globally
• ⏱️ Transmission lag: 3-6 months from commodity to consumer food prices
• 📉 Wheat, maize, rice: Already increasing in recent months

📋 Implications for Bangladesh

For Bangladesh, the FAO's warning is particularly alarming. The country is already grappling with 9.16 percent inflation (June 2026), with food inflation at 8.7 percent and 261 of 382 CPI items showing price increases. A renewed global food price surge would compound these existing inflationary pressures, potentially pushing food inflation back into double digits and further eroding household purchasing power — particularly for the 53.65 percent of small-scale farmers who already earn below Tk 34,000 per year.

Bangladesh's food security is also directly exposed to the Strait of Hormuz disruption through its fertiliser imports. The country imports a significant portion of its urea and other fertilisers from the Middle East, and Russia's $10/tonne discount on urea (reported in July) was a partial mitigation of these supply pressures. If the Hormuz disruption persists and fertiliser prices rise, Bangladesh's agricultural production costs will increase — potentially reducing crop yields and further amplifying food price inflation. The 3-6 month transmission lag identified by the FAO means that Bangladesh has a limited window to prepare for the price surge by building strategic food reserves, securing alternative fertiliser supply chains, and implementing targeted food subsidies for the most vulnerable populations. The government's recent decision to permit green chilli imports to cool prices suggests awareness of the emerging food price risk — but the scale of the challenge identified by the FAO will require a more comprehensive food security strategy than ad hoc import decisions, including investment in domestic agricultural productivity, climate-resilient crop varieties, and improved supply chain infrastructure to reduce post-harvest losses that compound the impact of rising input costs.