According to a study conducted by the European Central Bank and an environmental scientist, overall inflation and food prices could see surges as temperatures rise alongside climate change.
Climate Change Could Affect Food Prices, Fuel Inflation
As part of the "Global warming and heat extremes to enhance inflationary pressures" study, researchers examined the monthly price tags of different foods and other goods. They also looked into temperature and climate factors across 121 nations since the year 1996. They examined 20,000 points of data to look for an actual causal link between extreme weather and price increases. They also examined future projections for climate change.
The researchers then calculated that climate shocks and weather could lead to food rises of 1.5% to 1.8% each year within a span of one decade or so. This rate could be even higher in areas that are already hot, such as the Middle East.
Such figures could translate to a general increase in inflation amounting to 0.8% to 0.9% by 2035. This will be caused by the extreme weather of climate change alone.
Though these figures may seem small, they are significant numbers, especially for banks like the US Federal Reserve. This was noted by climate scientist Max Kotz, who is the lead author of the study from the Potsdam Institute for Climate Impact Research.
Kotz says that climate change's physical effects will persistently impact inflation. From the climate scientist's perspective, this will be one way climate change would end up undermining human and economic welfare.
By the year 2060, the part of inflation that is triggered by climate change could end up growing. Food prices all over the world may see an increase of 2.2% to 4.3% percent each year. This would be equivalent to a 1.1% to 2.2% rise in general inflation.
The pressure of inflation of the prices of food and other goods was also observed to be worse in seasons and areas that are hotten. Hence, North America and Europe could not see effects that are as grave as the Global South.
Climate economist Gernot Wagner from the business school of Columbia University, who did not participate in the study, says that this case of "climateflation" is very real and has striking numbers.
Read also: Unraveling Climate Change Denial: Insights Into Environmental Behavior and Beliefs on Global Warming
An Overlooked Effect of Climate Change
Kotz explains that in most cases, when economists tackle climate change and inflation, they mostly focus on the rise of energy prices in response to warmth-curbing efforts. However, this is just a segment of the entire issue.
The climate scientist adds that these are productivity shocks known to result from inflation. These also affect the inflation of food.
The research notes the European heat wave of 2022 as a striking example. The extreme heat led to food supply cuts, triggering a food price rise of around two-thirds of a percentage point. General inflation also surfed by roughly one-third of a percentage point. Prices soared even higher in Hungary, Romania, and certain areas across southern Europe.
Environmental economist Frances Moore from the University of California explains that the primary results regarding the historic link between national inflation and regional temperature anomalies are quite credible. Such findings are crucial as variability of essential good prices could be painful for consumers.
RELATED ARTICLE : More Than 200 Global Health Journals Unite to Declare Climate Change and Biodiversity Loss as Indivisible Health Crisis
Check out more news and information on Environment & Climate in Science Times.
