Global headline inflation has eased year to date, but a resurgence in energy prices and the threat to food prices from El Niño weather patterns threatens this disinflationary trend.

Tighter energy supply, a recovery in Asian travel demand, and the resilience of the US economy could keep oil prices higher and lead to spikes in LNG prices.

Meanwhile, agricultural prices face three threats: political risks in Europe, El Niño weather patterns, and disruptions to supply driven by policy responses to the first two.

Although workarounds have been found to reduce the impact of the Russia-Ukraine war on food supply, El Niño-related disruptions could lead to sudden bouts of food price inflation.

While these commodity price risks are unlikely to reverse the course of global disinflation, they could delay easing cycles, particularly in emerging markets more vulnerable to such shocks. 

 

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