El Niño key upside risk to inflation in Asia

Inflation across Asia continued to slow in June and is likely to fall further over the coming months. The key risk to the outlook is the weather – El Niño conditions have arrived in the Pacific and according to forecasters are set to build throughout the rest of 2023. A severe and lengthy El Niño could put significant upward pressure on agricultural prices over the coming months. This poses a risk to our forecast that more central banks will start cutting interest rates later this year.