El Nino and Oil Shock: Global Inflation Set for Unexpected Bump
A potentially 'super' El Niño weather event combined with higher energy prices due to the Middle East conflict could slow the decline in global inflation next year, according to JPMorgan.
The bank puts the odds of a 'very strong' or 'super' El Niño at 81% by the end of the year and 97% that conditions will persist into 2027.
A super El Niño typically disrupts agricultural production across Asia and Latin America through droughts, excessive rainfall, and shifting growing seasons. JPMorgan estimates this would lift global food inflation by about 0.7 percentage points at its peak.
The oil market is already supplying the second half of the equation with Brent crude climbing above $100 a barrel due to renewed fighting around the Strait of Hormuz and Houthi attacks on tankers in the Red Sea.