El Nino threatens Asia-Pacific food prices

S&P Global Ratings warned that Asia-Pacific economies, including India, Vietnam, Indonesia and the Philippines, face price surges and household vulnerability to weather-related supply shocks from the El Nino period starting in 2026. The effects will reach the region mainly through weaker rainfall and climate disruption, with key transmission channels including reduced agricultural output, higher food inflation, diminished hydropower generation, and vegetation fires and haze. S&P noted that many economies have expanded food buffer stocks, improved import planning, and strengthened water management to cushion disruptions. In India, strong food and grain buffers as of July 2026 are key to managing food shocks, with district-level coordination with farmers to minimize crop losses. The World Meteorological Organization reported that strong El Nino conditions are developing and expected to strengthen from August through October, bringing powerful weather events and above-normal temperatures worldwide. The State Bank of India projected retail inflation at 5% for FY27, citing risks to the agriculture sector and rural demand from deficient monsoon amidst El Nino conditions. S&P expects countries with greater reliance on agriculture to be more exposed, though proactive policies and declining agricultural role can buffer the fallout.