The ripple effects of regional conflict are reaching Pakistani dinner tables through a chain of global price shocks, according to a new State Bank of Pakistan (SBP) assessment. With 46 per cent of the population already facing hunger-like conditions, the central bank's latest monetary policy report paints a troubling picture of what lies ahead for food security. Main Developments The SBP's biannual monetary policy report, released on Monday, warns that global food inflation could exceed current expectations. Agricultural commodity prices may remain elevated due to higher gas prices and the looming risk of El Niño during the first half of FY27. Read also: PM Orders Three-Year Audit of Customs-Bonded Warehouses A critical factor is the disruption of LNG supply from Qatar, which accounts for approximately 19 per cent of global exports. This has driven up fertiliser prices worldwide, creating a cascade of cost increases that ultimately raises agricultural commodity prices. The July re-escalation of the Middle East conflict triggered a resurgence in energy prices, compounding the pressure on agricultural input costs. Global commodity price developments since January have caused a greater-than-expected deterioration in Pakistan's terms of trade. Background Pakistan's agricultural sector was already vulnerable before these global shocks. An outdated irrigation system causes significant water losses, while modern farming technology has not been adopted on a large scale, leaving the country exposed to water scarcity. Farmers face high input costs for fertiliser, electricity and seeds, with unpredictable climate patterns causing further losses, particularly for smallholders. The sector's fragility is evident in export figures: food exports fell by 25 per cent in FY26 to $4.744 billion, down from $6.330 billion in FY25. Rice exports suffered the steepest decline, dropping 31 per cent to $2.045 billion from $2.954 billion in the previous year. These figures reflect both higher input costs and the impact of global commodity price inflation on Pakistan's competitiveness. Why It Matters The implications extend beyond Pakistan's borders. The SBP notes that global growth prospects have become more uncertain, with the IMF revising down its global real GDP growth projection for CY26, largely due to weak growth in energy-importing countries. Reduced real incomes following the energy price shock are squeezing consumers in both advanced and emerging economies. For Pakistan, where food prices are already high and nearly half the population faces hunger-like conditions, any additional inflation could push more households into food insecurity. What's Next The SBP report identifies El Niño as a key risk factor to monitor during the first half of FY27, which could further elevate global food inflation. The central bank's assessment suggests that fertiliser and gas prices will continue to drive costs upward in the near term. How Pakistan's agricultural sector adapts to these pressures, and whether the government takes policy measures to cushion the impact on consumers, remains an open question. The coming months will reveal whether the central bank's warnings translate into actual price movements or if global conditions stabilise sooner than projected.