Peru cuts growth forecast as El Niño disrupts global food systems

What may become the strongest El Niño on record is now rippling across global food systems, prompting emergency aid programs in Central America, downgraded economic forecasts in South America, and warnings from the UK government about rising prices on supermarket shelves.

The UK Government Office for Science published an assessment this week warning that a "significant El Niño" is likely toward the end of 2026, with some forecasts predicting the strongest event ever recorded. The report cautioned that rice, wheat, coffee, and cocoa are among the commodities most vulnerable to weather disruption, and that the UK — which imports roughly half its food and 80 percent of its fruit and vegetables — could face higher prices in the months ahead.ladbible+1

Emergency Responses in the Global South

Guatemala announced on Wednesday that it would provide food assistance to more than one million families suffering from drought linked to El Niño. Social Development Minister Abelardo Pinto said initial government aid would reach 134,000 families, with maize, beans, and rice distributions supported by the United Nations World Food Programme expanding to 1.2 million families by year's end. The supplies are valued at roughly $62.5 million.surinametimes+1

Mozambique, meanwhile, has outlined a $401 million mitigation plan to protect food security, water infrastructure, and rural livelihoods ahead of a 2026–2027 rainy season that meteorological authorities warn will be heavily disrupted. International agencies including the International Organization for Migration have launched a $110 million regional appeal to protect 4.9 million people across southern Africa.streamlinefeed

Economic Fallout Reaches Central Banks

Peru's central bank on Friday lowered its 2026 GDP growth projection to 3.2 percent from 3.4 percent, citing El Niño's impact on fishing and agriculture. Governor Julio Velarde said the bank also raised its 2026 inflation forecast to 4.2 percent from 3.8 percent and did not rule out an interest rate hike in the coming months. El Niño is already affecting Peru's exports of fishmeal and fruit, both key growth drivers for the world's third-largest copper producer.devdiscourse+2

The pattern is not confined to Peru. Reuters Thomson Reuters Corporation ↘ 4.69% has reported that many emerging-market central banks that expected to cut rates earlier this year have reversed course, with banks in India, Indonesia, the Philippines, and South Korea among those that have raised rates at least once in 2026.tmgm

Commodity Markets and the Inflation Outlook

Agricultural futures have already moved sharply. Since July, soybean futures on the CBOT have risen more than 14 percent, corn more than 23 percent, and wheat more than 21 percent, according to TMGM's analysis. The UN Food and Agriculture Organization has revised down its global rice production forecast for 2026/27 to 553.1 million tons, a decrease of 1.9 percent from the prior year. Morgan Stanley ↘ 0.55% identified white sugar as the agricultural commodity most likely to see price increases, with sugarcane production threatened in both Asia and Brazil.tmgm

JPMorgan ↘ 0.84% economists have warned that food inflation could rise from 2.8 percent in the first half of 2026 to 5 percent by the first half of 2027 if El Niño combines with other supply pressures. NOAA's September forecast indicates high confidence in a historically strong El Niño peaking later this fall and into early winter, with consequences experts say will stretch far into 2027.gfdl.noaa+1