The Bank of England has warned that the extreme weather caused by El Niño could drive up food prices in UK supermarkets starting early next year. The central bank predicts that the impact of El Niño, combined with recent heatwaves, could push food prices up by around two percentage points. This increase is expected to last for several months, adding to the financial strain on millions of households already grappling with the cost of living.
The BoE’s analysis highlights that El Niño could disrupt crop yields in some regions while increasing them in others, leading to higher global agricultural commodity prices. Around a quarter of UK food imports, equivalent to 10% of the total food supply, come from regions exposed to El Niño. The bank also noted that the weather phenomenon could add pressure to global energy markets by reducing biofuel production and increasing demand for cooling and irrigation.
The effects on UK food price inflation are likely to emerge gradually, with fresh products like fruit and vegetables being the first to see price increases. The bank’s modelling estimates that the combined effects of this summer’s European droughts and the current El Niño event could increase UK food prices by around two percentage points at its peak in 2028. This could contribute to a 0.3 percentage point rise in the Consumer Price Index (CPI) inflation.
The timing of the extreme weather limited damage to winter cereals such as wheat and barley, but yields of some summer crops have been more significantly affected. The bank’s intelligence suggests that the current El Niño event could begin affecting UK food price inflation from early 2027.