Global commodity prices are projected to fall to their lowest level in six years in 2026, marking the fourth consecutive year of decline, according to the World Bank Group’s latest Commodity Markets Outlook. Prices are forecast to drop by 7 per cent in both 2025 and 2026, driven by weak global economic growth, a growing oil surplus, and persistent policy uncertainty.

Falling energy prices are helping to ease global inflation, while lower rice and wheat prices have helped make food more affordable in some developing countries. Despite the recent declines, however, commodity prices remain above pre-pandemic levels, with prices in 2025 and 2026 projected to be 23 per cent and 14 per cent higher, respectively, than in 2019.

“Commodity markets are helping to stabilise the global economy. Falling energy prices have contributed to the decline in global consumer-price inflation. But this respite will not last. Governments should use it to get their fiscal house in order, make economies business-ready, and accelerate trade and investment,” Indermit Gill, the World Bank Group’s chief economist and senior vice president for development economics, said in a press release.

World Bank forecasts global commodity prices to fall seven per cent in 2025 and 2026, hitting a six-year low amid weak growth, rising oil surpluses, and policy uncertainty.
Energy prices are expected to drop further, helping cool inflation.
The World Bank urges governments to use this window for fiscal reform, while warning that geopolitical and climate shocks could reverse the downward trend.

The global oil glut has expanded significantly in 2025 and is expected to rise next year to 65 per cent above the most recent high, in 2020. Oil demand is growing more slowly as demand for electric and hybrid vehicles grows and oil consumption stagnates in China. Brent crude oil prices are forecast to fall from an average of $68 in 2025 to $60 in 2026—a five-year low. Overall, energy prices are forecast to fall by 12 per cent in 2025 and a further 10 per cent in 2026.

Commodity prices could fall more than expected during the forecast horizon if global growth remains sluggish amid prolonged trade tensions and policy uncertainty. Greater-than-expected oil output from OPEC+ could deepen the oil glut and exert additional downward pressure on energy prices. Electric-vehicle sales, which are expected to increase sharply by 2030, could further depress oil demand.

Conversely, geopolitical tensions and conflicts could push oil prices higher and boost demand for safe-haven commodities such as gold and silver. In the case of oil, the market impact of additional sanctions could also lift prices above the baseline forecast. Extreme weather from a stronger-than-expected La Niña cycle could disrupt agricultural output and increase electricity demand for heating and cooling, adding further pressure to food and energy prices.

“Lower oil prices provide a timely opportunity for developing economies to advance fiscal reforms that promote growth and job creation,” said Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group. “Phasing out costly fuel subsidies can free up resources for infrastructure and human capital—areas that create jobs and strengthen long-term productivity. Such reforms would help shift spending from consumption to investment, rebuilding fiscal space while supporting more durable job creation.”

Fibre2Fashion News Desk (KD)