El Niño also reinforces the risks of extreme weather events stemming from global warming. Sea surface temperatures in the North Atlantic are currently significantly above their average over the past 40 years (Slide 5, right-hand side).
The war in Ukraine, in particular the heightened uncertainty about the Black Sea grain deal and the flooding caused by the destruction of the dam in the Kherson region, poses further upside risks to food inflation. New research by the Federal Reserve Bank of St. Louis suggests that food price inflation matters.