The global de-inflation process, which has continued for several years, is facing new supply-side shocks. The situation in the Middle East continues to disrupt crude oil and natural gas supplies, and European gas stocks have been low for many years; at the same time, the growing El Niño phenomenon has begun to threaten global food production. Prices of basic commodities such as oil, gas, and food face upward risks at the same time, causing market concerns about global “re-inflation” to heat up again. J.P. Morgan believes that what is really worth paying attention to is not a single food or energy shock, but rather that the two may have a combined effect. Economists estimate that “Super El Niño” itself may push up global food inflation by about 0.7 percentage points during the peak period; if added to the rise in diesel, fertilizer, and packaging costs due to the situation in the Middle East, the impact on global food inflation may expand to 1.3 to 1.5 percentage points, and make overall global inflation in 2027 about 0.3 percentage points higher than originally anticipated.

The global de-inflation process, which has continued for several years, is facing new supply-side shocks. The situation in the Middle East continues to disrupt crude oil and natural gas supplies, and European gas stocks have been low for many years; at the same time, the growing El Niño phenomenon has begun to threaten global food production. Prices of basic commodities such as oil, gas, and food face upward risks at the same time, causing market concerns about global “re-inflation” to heat up again. J.P. Morgan believes that what is really worth paying attention to is not a single food or energy shock, but rather that the two may have a combined effect. Economists estimate that “Super El Niño” itself may push up global food inflation by about 0.7 percentage points during the peak period; if added to the rise in diesel, fertilizer, and packaging costs due to the situation in the Middle East, the impact on global food inflation may expand to 1.3 to 1.5 percentage points, and make overall global inflation in 2027 about 0.3 percentage points higher than originally anticipated.