Concerns that the surge in global commodity prices will trigger inflation in many emerging markets, especially food-importing countries, have recently been building. All commodity indices have been on a rally since late Q2 2020. S&P GSCI Agricultural Index, for instance, recently hit its highest level since 2014 (+36% since August 2020), while prices are rising at their fastest pace on an annual basis since 2011. This raises a few questions. First, are we in the beginning of another supercycle or already in the middle of one? Second, how have the commodity dynamics rapidly changed to trigger such a cycle despite the effect of pandemic-related distortions on potential GDP? Third, how will these pressures disrupt the inflation outlook, especially in EMs, such as Egypt?
Mona Bedeir
Senior Economist
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