Every few years, a large area of the Pacific Ocean becomes warmer than usual. Scientists call this weather phenomenon El Niño, which means ‘The Little Boy’ in Spanish. Although it starts in one part of the world, it changes winds and rainfall across the planet.
In India, El Niño often weakens the monsoon. With less rain, farmers may harvest fewer crops such as rice, pulses, vegetables and sugarcane. When food production falls, prices often rise. Families spend more on groceries and inflation–the overall rise in prices–can increase.
Sadly, the effects don’t stop there. In Brazil, dry weather can reduce coffee harvests, making coffee more expensive around the world. In West Africa, unusual weather can damage cocoa crops, causing chocolate prices to rise. Across parts of Europe, hot and dry conditions increase the risk of large wildfires. While climate change is the biggest reason behind these fires, weather patterns such as El Niño can sometimes make these conditions even more severe.
Weather doesn’t just affect farms—it affects entire economies. Lower rainfall can reduce electricity generated by hydroelectric dams, while floods, droughts and wildfires can disrupt transport and businesses. In Europe, rivers sometimes be come so shallow during heatwaves that cargo boats cannot carry full loads, making it more expensive to move goods. Airlines monitor storms to avoid delays, insurance companies prepare for losses from natural disasters and even investors watch weather forecasts because poor harvests can affect company profits and stock markets.
The next time you hear of El Niño, don’t just think about the monsoon. It may also be giving an early clue about the price of the food on your plate, the electricity that powers your home and the health of the economy.
Sushant Suri, CFA, FRM, CAIA, CFP is a finance educator with 20+ years of experience. He is the founder of FinGuru and has trained 20,000+ students globally for the CFA Program, with experience across leading investment firms. He is passionate about simplifying complex financial concepts and helping young readers understand money, careers and the evolving world of finance. He can be reached at [email protected]
