OECD Warns of Potentially Severe El Niño as Food Price Risks Mount

A very strong El Niño could hit harvests across Africa, Southeast Asia and Central America, adding fresh inflationary pressures to an already fragile global economy

There is a 95% probability that a very strong El Niño event will develop by the end of the year, raising concerns over agricultural production, food inflation, and broader economic stability, according to OECD Secretary-General Mathias Cormann.

Speaking during the presentation of the OECD’s Interim Economic Outlook, Cormann said the phenomenon could inflict further damage on global crop yields at a time when food markets are already under pressure.

Cormann and OECD Chief Economist Stefano Scarpetta noted that agricultural and food prices had already been moving higher due to the conflict in the Middle East. However, the growing likelihood of an intense El Niño event is now increasingly being factored into market expectations, contributing to a sharper rise in food commodity futures.

Compared with the OECD’s June projections, the outlook has deteriorated as traders reassess the risks facing global food supplies. The extreme heat recorded across the Northern Hemisphere during the summer has already damaged some grain harvests, adding another layer of uncertainty to agricultural markets.

According to OECD officials, an escalation from a strong El Niño to a very strong one would place additional pressure on crop production, particularly in Southern Africa, Southeast Asia, and Central America. These regions are especially vulnerable to weather disruptions that can severely affect agricultural output and food availability.

The consequences would be felt most acutely by low-income countries and poorer households, where food accounts for a larger share of consumer spending. Reduced harvests and tighter supplies could further undermine access to affordable food, increasing the risk of food insecurity in some of the world’s most vulnerable regions.

OECD officials also warned that the impact would likely extend beyond agriculture. Higher food costs could reinforce inflationary pressures, while climate-related disruptions may contribute to rising energy prices, creating additional challenges for policymakers and central banks already navigating a fragile global economic environment.

The organization stressed that stronger international cooperation may be required to mitigate the economic and social consequences of a severe El Niño event and to help vulnerable countries manage the potential shock to food and energy markets.

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