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El Niño could raise US inflation by up to 1 percentage point in 2027
A San Francisco Fed paper warns El Niño could raise US inflation in 2027.
El Niño is a weather pattern that can bring droughts, floods and higher temperatures in different parts of the world.
Researchers estimate it may have already lifted US headline price levels by about 0.3 percentage point from April to July this year.
They expect that initial effect to fade by the end of 2026, but say prices could rise by as much as 1 percentage point in 2027.
The risk could extend beyond food, because weather disruptions may affect fertilizer, energy and other supply chains.
This matters because US inflation has remained above the Fed’s 2% target for more than five and a half years.
The Fed held interest rates steady last week and is widely expected to raise them in December and again next year to contain inflation.
A San Francisco Federal Reserve research paper says El Niño could raise US inflation by as much as 1 percentage point in 2027.
The researchers estimate the current episode may have already lifted US headline price levels by about 0.3 percentage point between April and July 2026.
They expect that initial increase to fade by the end of 2026 before inflationary pressure could return in 2027.
The paper says El Niño could also support employment, while its broader economic effects remain uncertain.
The researchers warn that weather disruptions could interact with supply-chain and fertilizer-market problems in unexpected ways.
- Who
- San Francisco Fed researchers Molly Arden, Toby Graf and Brigitte Roth Tran.
- What
- A Fed research paper says El Niño could push US prices higher by as much as 1 percentage point in 2027.
- When
- The paper was published on Monday, November 2, 2026. It estimates effects in 2027.
- Where
- The United States, with possible weather disruptions in several parts of the world.
- Why
- El Niño could cause extreme weather and disrupt supply chains, raising prices.
This story does not have two clearly opposing sides.
The researchers estimate that El Niño may have lifted US headline price levels by about 0.3 percentage point.
The researchers expect the initial price increase to fade.
El Niño could push prices higher by as much as 1 percentage point.
- Potential 2027 price increase
- Up to 1 percentage point
- Estimated April–July 2026 price impact
- About 0.3 percentage point
- US inflation target
- 2%
- Paper authors
- Molly Arden, Toby Graf and Brigitte Roth Tran
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What people are saying
We estimate that the current episode may have already increased headline price levels about 0.3 percentage point between April and July of this year
More recent developments like the disruptions to the fertilizer market, supply chain disruptions in energy markets, and record setting weather events could also interact with this El Nino in unexpected ways