Asia: El Niño and food inflation

Research evidence excerpt

Asia: El Niño and food inflation

Siddharth Jamad (65) 6807-5503 Asia Pacific Economic Research J P M O R G A Nsiddharth.jamad@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch 01 July 2026

Jin Tik Ngai (65) 6807 5556

jintik.ngai@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch

Asia: El Niño and food impulse: the start of what could be the strongest El Niño on

record. Notwithstanding the recent easing in agricultural input

inflation costs (i.e. fuel and fertilizers), our empirical analysis shows

that a very strong El Niño could boost food inflation in the

• A more benign energy backdrop coincides with the region, but with a wide cross-country gradient in vulnerabili-

formation of an El Niño… ty: India and some ASEAN economies stand out as the most

• …which is likely to intensify into a rare “super” El exposed, while North Asia appears relatively more insulated.

Niño by the year-end

Figure 3: Oil and fertilizer prices

• Our estimates suggest a super El Niño could lift head- US$/bbl US$/metric ton

line inflation by 0.3%-pts on average across Asia… 130 1000

• …but with wide cross-country variation: India, Viet- 110 Brent crude Urea 800

nam appear most exposed; North Asia more insulated

90 600

At the onset of the Middle East conflict, we were worried

about the risk of sustained energy shortages precipitating an 70 400

abrupt growth slowdown in Asia—the region most dependent 50 200

on Middle East energy supplies. But despite the Strait of Hor- 2021 2022 2023 2024 2025 2026

muz staying effectively closed for over three months, aggres- Source: J.P. Morgan, Bloomberg Finance L.P.

sive import diversification, reserves drawdown, and a sharp

drop-off in Chinese energy demand helped sustain growth Ready, Set, El Niño…

resilience elsewhere in the region (Figure 1).