El Niño is poised to cause the next big inflationary shock to the global economy, Deutsche Bank says.
In a note to clients on Monday, the bank warned that a particularly intense warming phenomenon in the Pacific Ocean could be on the way this year. When paired with other existing inflationary forces, the weather event could exacerbate consumer price growth, the bank said.
“El Niño cycles typically repeat every few years with irregular frequency,” Henry Allen, a macro strategist at the bank, wrote in the note. “However, today’s episode is particularly concerning because forecasts suggest it will be a very strong one, ranking among the most serious in recent history.”
El Niño is part of a cyclical warming and cooling pattern in the Eastern Pacific. Since it brings warmer waters, the Pacific jet stream moves further south, which affects weather…
