Inflation pains may get worse this year: West Asia crisis, El Niño key triggers

West Asia conflict and super El Niño are key triggers for higher inflation in 2026.

Crude oil prices remaining high for over 100 days have entered cost calculations, raising core inflation via higher prices for pesticides, fertilisers, paints, and other products.

Even if pre-war equilibrium is restored, producers may not lower final prices, as seen with restaurants and airlines unlikely to reduce prices fully.

Fuel price impact on CPI is policy-driven; LPG prices were raised but fuel prices remained unchanged until excise was lowered.

It will take about three months for normal supply restoration if a permanent peace accord is signed.