Economists are sounding the alarm that a "super" El Niño weather cycle is brewing, which could send shockwaves through global food prices - potentially lingering into 2028. This warning comes at a critical time when world food prices have reached their highest levels in three years, largely driven by the ongoing conflict with Iran.
The developing El Niño phenomenon involves warmer water spreading across the central and eastern equatorial Pacific due to altered wind patterns, a natural process characterised by scientists as having an unprecedented likelihood of becoming a "very strong" event. The US National Oceanic and Atmospheric Administration (NOAA) confirmed last month that warming conditions are taking hold, with a 63% chance of sea surface temperatures exceeding 2°C above normal later this year - indicating severe potential impacts through heatwaves, flooding, and more intense storms.
Experts fear the prospect of "climateflation" will put further pressure on already strained household budgets worldwide, as central banks closely monitor the situation. Analysts at UniCredit highlighted that El Niño brings climate-related price spikes back to the forefront, noting recent European heatwaves underscore a shifting climate baseline, which El Niño could amplify later in the year.
Historically, El Niño events have significantly disrupted harvests and food supply networks, with past strong events causing widespread issues. However, NOAA projections suggest the current cycle could be even more severe, increasing the risk of droughts and floods impacting crop yields and global food availability. Goldman Sachs analysts estimate a 15.8% surge in global food commodity prices, with a predicted 1.3% increase in food prices across the eurozone.
The full effects of this price surge are not expected to materialise immediately. Goldman Sachs suggests that the consequences could take until the second half of 2028 to be fully realised, due to varying planting, growing, and harvesting cycles of different crops, as well as potential logistical challenges, including impacts on water levels in vital shipping routes.
The UK, a significant importer of food, may see an indirect impact from these rising global prices, which will likely compound the disruptions already caused by the Iran war - adding further strain to food supply chains already contending with higher prices and shortages of fertilisers and energy.