Higher energy prices and a strengthening El Niño could slow inflation declines by 0.3 percentage points next year.
JPMorgan estimates a super El Niño event, combined with elevated energy prices from Middle East tensions, could add 0.3 percentage points to global headline inflation in 2024. The bank forecasts an 81% chance of the current El Niño intensifying into a “very strong” or “super” event by year-end, with near-certain persistence into early 2025.
The warning follows a period of cooling inflation, with central banks signaling potential rate cuts. Prior El Niño events, such as in 2015-16, disrupted agricultural and energy markets, contributing to price volatility. Consensus forecasts had anticipated inflation continuing its downward trend next year.
No immediate market reaction was specified, but the report highlights upside risks to inflation expectations.