International Monetary Fund or IMF has stated in a latest update that if elevated energy and food prices persist, they will fuel inflation worldwide. Historically, sustained oil price spikes have tended to push inflation higher and growth lower. Over time, higher transport and input costs work their way into the prices of manufactured goods and services. For many countries that had only just brought inflation closer to target, and even more so those with stickier inflation, this risks a renewed period of uncomfortable price pressures.

IMF noted further that in much of Asia and parts of Latin America, where inflation had been relatively low, higher energy and food costs will test the resilience of expectations, particularly in economies with weaker currencies and large energy imports. In Europe, another energy driven spike in prices would come on top of existing cost of living strains, raising the risk of more persistent wage demands. In low income countries where people spend a large share of their income on food, especially in Africa and parts of the Middle East, and Central America higher food prices carry acute social and economic costs.