It is believed that the existing Shrinkflation and stagflation coupled with an impending El Nino-induced heat this year, might severely impact the most vulnerable groups.
Critical Trilemma of Stagflation, Shrinkflation and El Nino
- Stagflation: Defined as a period characterized by slow economic growth, high inflation, and low employment opportunities.
- Rising costs of LPG and cooking oil since West Asia tensions, have impacted various sectors.
- Further, Reserve Bank of India (RBI) recently cut its growth forecast for FY 2027 owing to inflationary pressures from West Asia conflict, along with the risks posed by El Nino.
- Shrinkflation: Refers to reduced quantity of a product priced at the same cost.
- E.g., a pack of biscuits containing lesser quantity at the same price as before.
- Its impact is more on the informal sector living hand to mouth that purchase small quantities of products.
- El-Nino: Complex weather pattern that occurs when warm water builds up along the coast of South America, especially near Peru and eastern parts of the equatorial Pacific.
- For India, this often results in weak or delayed monsoon season.
- As per World Meteorological Organization (WMO) El Niño/La Niña Update, there is an 80% likelihood of an El Niño event during June–August 2026.
The triple squeeze of shrinkflation, lesser job opportunities, and climate change requires both economic and climate challenges to be dealt with together by focussing on combating climate-related stresses that risk the growth of developing countries.
