Economists are warning that a “super” El Niño weather cycle this year could drive a severe shock to global food prices lasting into the second half of 2028, while the Iran war has already pushed world food prices to the highest level in three years. The people who buy bread, rice, coffee and sugar are left to absorb the hit. The institutions that shape the system keep talking about “pressure” and “mitigation” as if this were weather in the abstract, not a hierarchy of power deciding who eats and who pays.
Two shocks at once
Scientists have said the 2026-27 El Niño has a historically unprecedented chance of developing into a “very strong” event, with heatwaves, flooding and stormier weather. The US National Oceanic and Atmospheric Administration confirmed last month that warming conditions were taking hold in the Pacific and that there was a 63% chance of sea surface temperatures exceeding 2C above normal later this year. That’s the kind of number that gets buried in technical language while the consequences land in kitchens, markets and fields.
At a time when households around the world are already feeling the pinch from soaring living costs, experts say an extreme El Niño could add further to the pressure. The prospect of a renewed inflation shock is also rattling central banks, adding to concern that interest rates could be kept at elevated levels. The machinery of monetary discipline stays intact. The costs move downward.
“El Niño puts ‘climateflation’ back on the agenda,” analysts at the Italian bank UniCredit wrote in a research note. “Europe’s recent heatwaves are a reminder that the climate baseline is already shifting. El Niño could add a new layer of pressure later this year, as it amplifies the effects of global warming.” The language is neat. The reality is not. Climate disruption and market power are now hitting the same table.
Who gets hit first
The naturally occurring phenomenon has a long history of affecting harvests and the food supply network. More than a century ago, an El Niño that would probably have been the most severe on record prompted catastrophic droughts across China, southern Africa, Brazil, Egypt and India. Causing famine conditions in a situation worsened by colonial rule, millions were killed, including more than 6 million people in India in 1876-78. The old order knew how to turn weather into mass death. The new one has better spreadsheets.
El Niño events in 1981-82, 1996-97, 2015-16 and 2023-24 have been some of the strongest on record. NOAA projections indicate the 2026-27 cycle could be even more severe, elevating the risk of droughts and flooding hitting harvests and food supply worldwide. Goldman Sachs said the strength of this El Niño could cause a 15.8% surge in global food commodity prices. It predicted food prices could rise by 1.3% across the eurozone. The eurozone gets its own small number. The damage elsewhere is not so politely contained.
According to Goldman Sachs, the consequences could take until the second half of 2028 to be “fully realised”. That delay comes from the timing of extreme weather hitting food production, with different planting, growing and harvesting cycles for different crops. Logistical challenges, including water levels in canals and rivers used for key shipments, will also matter. The supply chain, that sacred object of modern capitalism, turns out to be as fragile as the people forced to depend on it.
Markets, not people, set the terms
“El Niño does not affect agriculture uniformly. It reshapes global rainfall and temperature patterns, creating regional winners and losers,” analysts at UBS said. Some regions could stand to benefit from warmer weather conditions. That’s the language of the market laid bare: winners and losers, as if a food crisis were a portfolio adjustment.
El Niño would compound disruption caused by the Iran war by adding food supply chain woes to already higher prices, and shortages of fertiliser and energy supplies, analysts say. “Even modest supply disruptions could trigger large price moves than historical patterns could imply,” the UBS analysts said. Lower-income countries — already hit hardest by the Iran conflict — are likely to suffer most. The burden keeps sliding toward those with the least room to absorb it.
El Niño has already begun to affect crops, driving a drier monsoon season in India, with some regions only experiencing 25% of their usual rainfall, and parts of central India only receiving 50%, which could affect supply for wheat, rice and sugar cane, Goldman Sachs said. Droughts in south-east Asia could affect palm oil supply, a significant ingredient in processed food, while harvests of coffee and cocoa could be affected. Warmer, wetter conditions could also exacerbate the spread of disease, hitting crop yields in future years.
In North America, the impact of El Niño is strongest in the winter, and while conditions in Europe can be influenced by the weather event, analysts say other factors — such as the effect on global food prices — will be where it is felt. Three years ago, the European Central Bank estimated that a strong El Niño could drive up global food commodity prices by up to 9%, with soya beans, corn and rice seeing the biggest spikes. How prices reflect on shelves depends on mitigation strategies and domestic policies. Consumer demand and retail pricing also play a role. The people at the bottom get a menu of explanations. The price still arrives.
UniCredit said the capacity for an extreme El Niño scenario remains high. It said this could lead to a 14.3% hit to global agricultural production, equivalent to $342bn in lost output. “Price shocks could reach 10% to 50% across core commodities, while the most exposed crops — including rice, palm oil, sugar and coffee — could rise by 50% to 100% or more,” the bank said. “The food system enters the second half of 2026 with buffers, but with little margin for error.” Buffers for whom, exactly, is left unsaid. The system has margins. People don’t.