El Nino and geopolitical tensions threaten inflation surge in 2026. State Bank of India warns that possible El Nino formation combined with ongoing global conflicts could significantly pressure inflation dynamics. The Nino 3.4 Sea Surface Temperature Index suggests El Nino may transition to a positive phase in 2026, with 40-60 percent probability. This weather pattern, coupled with negative Indian Ocean Dipole movements, could trigger deficient monsoons and disrupt agricultural output, directly impacting food supply and inflation. Beyond weather risks, geopolitical developments are disrupting global commodity markets. Maritime trade shutdowns and production disruptions have forced oil storage on water, intensifying speculation and adding pressure across commodity markets.
