The last mile of inflation

Global commodity forecasts are written in barrels and percentages, but people pay for them at the vegetable stall. The World Bank's latest Commodity Markets Outlook projects commodity prices to rise 23 per cent this year and energy prices 32 per cent, reversing three years of declines. Brent is forecast to average $91 a barrel, against $69 in 2025. These numbers will be read in finance ministries and on trading floors. Across the Global South, households are already living in them.
The pattern is the same from North Africa to South Asia. Headline inflation looks manageable, but the prices of items families buy every few days are rising much faster. In Egypt, overall inflation was 12.8 per cent in September, yet vegetable prices were up 30.9 per cent on the year. Pakistan's inflation reached 10.3 per cent, well above its central bank's target, after perishable food inflation hit nearly 25 per cent in August; onion prices alone were up almost 137 per cent from a year earlier. Even in Oman, a stable, energy-exporting economy with regulated fuel prices, vegetables rose 20.1 per cent and fruit 16.3 per cent in September, while headline inflation stood at just 3.2 per cent.
This gap between the headline and the basket is the story. Subsidised bread, regulated utilities, and items whose prices move slowly cushion average inflation. Fresh food has no such protection. It is the most energy-intensive, time-sensitive part of the food system: diesel to harvest and truck it, refrigeration at every stage, fast shipping and insurance on every container. When fuel, freight and war-risk premiums rise together, a tomato absorbs all of them before it reaches the shelf. A sack of rice can wait in a warehouse; a crate of lettuce cannot.
The World Bank's broader data confirms that these are not isolated cases. In the first quarter of 2026, food inflation exceeded 5 per cent in half of low-income countries, a sharp rise from the previous quarter, even as it eased in richer income groups. In April, the Bank warned that the Middle East war could push up to 45 million more people in developing countries into acute food insecurity. The risks aren't over: the Bank has also flagged a rising chance that El Niño conditions will persist into 2027, threatening harvests in many of the same regions.
Not everyone in the chain is losing. Shell, BP and TotalEnergies guided that their refining margins this quarter would be three to four times higher than a year ago, with Shell expecting a record $42 a barrel. ExxonMobil signalled that stronger refining margins could lift its downstream profit by $4.5 billion over the previous quarter.
That contrast matters. Supply shocks don't raise costs evenly along a chain; they redistribute value as they move. Those who control scarce capacity in the middle, such as refining, trading, shipping and wholesale, can widen their margins. Those at the end, with no one to pass costs on to, absorb them. The household is the final buffer. This is not a claim of bad faith; it is how concentrated markets behave under stress. But it means the burden lands on those least able to carry it.
The Global South is exposed on every side. Net importers of fuel and food pay higher world prices through weakening currencies and thin reserves. Their governments have little fiscal room for relief, and much of what they have goes on debt service. The IMF expects global headline inflation of 4.7 per cent this year, and central banks facing that will be slow to cut rates, keeping credit expensive for the small traders, transporters and farmers who feed these cities. Where households spend a large share of income on food, a 20 or 30 per cent rise in vegetables is not an inconvenience. It is a choice between nutrition and rent, school fees or medicine.
Some governments with fiscal space are already responding. From 1 October, Oman expanded its zero-rated VAT list to 807 food items, up from 488, covering vegetables, fruit, meat, dairy, fish, grains and bread; the Tax Authority said the aim was to ease living costs. On 25 October, Saudi Arabia ordered a SR500 ($133) monthly allowance increase for eligible civil and military employees, retirees and social security households, ahead of higher electricity and water tariffs from January 2027.
These measures show what the last mile needs: relief that reaches the household directly, through the price at the till or the income in the pocket. But they also show the divide. Gulf states can afford such support because high energy prices fill their budgets. Most of the Global South faces the same price shock with none of that cushion.
So, what should be done? First, relief must be targeted. The World Bank has cautioned against broad, untargeted subsidies and urged temporary support for vulnerable households that preserves fiscal stability. Cash transfers and fresh-food support for the poorest protect those most exposed.
Second, governments should watch margins as closely as prices. Tracking the gap between import, wholesale and retail prices for key fresh foods would show whether shelf prices reflect real costs or widening spreads in the middle of the chain. A tax cut only helps if it reaches the shopper.
Third, food security policy must treat fresh produce as strategic. Regional sourcing, cold-chain investment, protected agriculture and storage hubs closer to consumers shorten supply chains and reduce exposure to distant chokepoints. Every link removed is one less place for a shock to enter.
Fourth, international institutions should recognise that this shock was imported. The economies paying the most did nothing to create it. Financing for war-induced food and energy shocks, offered quickly and on light terms, would ease pressure before it turns into social unrest.
A resilient global economy is measured not by how much its exporters and refiners earn in a crisis. It is whether a family in Cairo, Karachi or Muscat can still afford a basket of vegetables when the shock reaches the last mile.