As the euro zone's central bank toils to push inflation towards the targeted "close to" 2 percent, a little help may arrive via the weather. That's because heavy snow and cold temperatures could provide a small boost to prices, according to BNP Paribas.
"Past evidence suggests that El Nino has a marginal effect on euro zone inflation — around a 0.1 percentage point increase in the annual headline rate — mainly by way of higher seasonal food prices," Gizem Kara and Stefan Ubovic, economists at BNP Paribas, said.
El Nino is associated, at least in Europe, with higher prices for seasonal foods such as fish, fruit and vegetables, plus meat. That's even allowing for the general increases in seasonal food prices associated with the winter months.
"The harsher winters, they take a toll on seasonal crops and cause disruption to transportation. As some food items are inputs into products such as animal feed, we generally see livestock prices increasing, too," Kara and Ubovic said.
Countries outside of Europe might also see inflation rise, including the Philippines and other major agricultural producers. While that could be good for the Philippines, where inflation remained at 0.4 percent year-on-year in October, the effect would be less positive for those like Brazil and Colombia that are grappling to control price rises.
"Most of the pressures (in Colombia) over the last few months have been driven by food prices, related to the strongest El Nino since 1997-1998. This likely will push food prices up further if it does not recede soon. This seems unlikely," Andres Abadia, senior economist at Pantheon Macroeconomics, said in a report this week.