Emerging markets stare at inflation risks as powerful El Niño looms

Emerging economies are bracing for fresh inflation and growth risks as the U.S. National Oceanic and Atmospheric Administration forecasts an 81% chance of a very strong El Niño from October to December. The event could rank among the most powerful since 1950, potentially lifting food prices and damping growth. Markets and analysts warn that drought in parts of Asia and heavy rains in parts of South America could threaten harvests. Because households often spend a larger share of income on food and agriculture is a major economic driver, central banks may need to keep policy tighter for longer. The outlook also comes as several Asian countries have already raised rates amid higher energy and fertilizer costs.