New study uncovers lesser-discussed yet major driver of inflation: 'The numbers are rather striking'

Rising temperatures and extreme weather events will drive food prices and inflation higher within the next decade, according to a new study.

A joint product of climate scientist Max Kotz and the European Central Bank, the paper was published in Communications Earth & Environment on March 21. Kotz works at Germany's Potsdam Institute for Climate Impact Research.

"The physical impacts of climate change are going to have a persistent effect on inflation," he told Phys.org. "This is really from my perspective another example of one of the ways in which climate change can undermine human welfare, economic welfare."

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One reason for the projected increases is that hot weather and natural disasters, including floods and droughts, can crush food crops. These events are getting more intense and happening more frequently because of rising global temperatures, which are "basically steroids for weather," as one climate expert says.

"There are these productivity shocks that we know about from climate change, from the weather phenomena caused by climate change, from heat waves and so forth to reduce agricultural productivity," Kotz said. "Those also then have a knock-on effect on food inflation, on headline inflation."

In the study, researchers calculated that "weather and climate shocks" will increase food costs by 1.5 to 1.8 percentage points annually by 2035 and inflation by 0.8 to 0.9 percentage points, Phys.org reported, noting the figures may seem small but are "significant."

The study used "national exposure to different weather conditions" and monthly prices of goods and services from 121 countries from 1996 to 2021.

"Pressures are largest at low latitudes and show strong seasonality at high latitudes, peaking in summer," the authors wrote, meaning the problem will be worse for countries close to the equator. Those nearer the poles will have issues when the heat is hottest.

"Climateflation" is "all too real and the numbers are rather striking," Columbia University climate economist Gernot Wagner told Phys.org.

"Beyond 2035 the magnitude of estimated pressures on inflation diverges strongly across emission scenarios, suggesting that decisive mitigation of greenhouse gases could substantially reduce them," according to the study. "By 2060, there is a strong and robust difference in the average global pressures on food inflation between the highest and lowest emission scenarios."

The scientists estimated that by 2060, food inflation will rise by 2.1 percentage points per year. But if countries cut their pollution production to a best-case scenario, climate-driven inflation will be "only marginally larger in 2060 than in 2035," they said. A worst-case scenario, however, would lead to food inflation of more than 4 percentage points per year "across large parts of the world."

To help decrease the amount of pollution we release into the atmosphere — where it surrounds the planet like a blanket, trapping heat — you can take steps such as switching to solar or wind energy to power your home, changing your buying habits to support companies that don't use plastic, and reducing your red meat intake. The Commons app will even help you do it, and you can earn money in the process.

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