Now came a promising estimate: the price of gasoline and food is clearly falling

In its most recent market outlook, the World Bank estimates that gasoline and food prices will decrease globally over the next few years. Tells about it The Guardian.

The background is especially the drop in oil prices, which is due to the increase in production, the drop in Chinese demand and the ongoing transition to clean energy.

The World Bank predicts that global oil supply will exceed demand by an average of 1.2 million barrels per day, which would reduce the average price of Brent crude from $80 a barrel this year to $73 in 2025 and $72 in 2026.

According to the World Bank, the decline in the value of oil also has a downward effect on the price development of global commodities, such as food and metals.

The World Bank predicts that global commodity prices will fall by almost 10 percent in the period from 2024 to 2026.

World market prices of food are expected to fall by nine percent this year and another five percent the following year.

Support for central banks

Asia’s economic powerhouse, China, has acted as the driving force behind the world’s oil demand. China’s demand has already begun to wane.

In September, the news channel CNBC said that China’s muted demand and the associated oversupply pushed US crude oil prices to their lowest level in more than a year.

The high prices of gasoline and food have disciplined people in the last couple of years, for example in various parts of Europe and the United States.

The easing of price pressures, which is also indicated by the World Bank’s forecast and review, will be good news for the central banks if it materializes, as it will provide more support for interest rate cuts.

Inflation has already moderated in the euro area and also in the United States, as a result of which both the European Central Bank and the US Federal Reserve have started interest rate cut cycles.

A decrease in the interest rate, on the other hand, can boost citizens’ purchasing power and speed up companies’ investments.

The Middle East is an open card

Geopolitical tensions still create uncertainty. In particular, the possibility of the expansion of fighting in the Middle East has raised concerns about the rise in oil prices.

Crude oil prices rose worldwide in early October when Iran fired nearly 200 missiles at Israel.

On the weekend Israel carried out a series of retaliatory strikes against Iran in response to Iran’s earlier missile strikes against Israel.

ABC News said that the world market price of oil had, however, turned to a sharp drop after the retaliation strike, because Israel targeted Iran’s military targets and not its energy infrastructure, as feared.

Iran is the world’s seventh largest oil producer, but a wider conflict in the Middle East could affect some of the world’s largest energy and oil producers in the region.