According to a recent study conducted by an environmental scientist and the European Central Bank, the increasing temperatures caused by climate change will result in higher food prices and overall inflation.

According to a recent study in the journal Communications, Earth, and the Environment, researchers have analyzed the monthly prices of food and other commodities, as well as temperatures and climate data from 121 countries since 1996. Their calculations indicate that “weather and climate shocks” may lead to a yearly increase of 1.5 to 1.8 percentage points in the cost of food within the next ten years. This effect may be even higher in regions that are already experiencing high temperatures, such as the Middle East.

According to the study, extreme weather conditions caused by climate change will result in a growth of 0.8 to 0.9 percentage points in overall inflation by 2035.

The figures may appear minor, but they hold significant importance to financial institutions such as the U.S. Federal Reserve who work to combat inflation. This insight was shared by Max Kotz, a climate expert at the Potsdam Institute for Climate Impact Research in Germany, who led the study.

According to Kotz, climate change will cause ongoing effects on inflation. In my opinion, this is yet another example of how climate change can harm human well-being and the economy.

The study stated that the climate-induced factor of inflation is expected to increase by 2060, resulting in a projected annual hike of 2.2 to 4.3 percentage points in global food prices. This corresponds to a 1.1 to 2.2 percentage point rise in total inflation.

According to Gernot Wagner, a climate economics expert at Columbia University’s business school who was not involved in the study, the concept of “climateflation” is a true concern with particularly noteworthy figures.

Kotz and economists from the European Bank examined 20,000 pieces of data in order to discover a direct correlation between severe weather, particularly high temperatures, and increasing costs. They also analyzed future projections for climate change and found alarming price increases.

According to Kotz, economists typically discuss inflation and climate change in terms of the rising costs of energy due to attempts to reduce warming. However, this is just one aspect of the issue.

Kotz explained that climate change can lead to productivity shocks, such as extreme weather events and heat waves, which can lower agricultural productivity. This can ultimately result in increased food inflation and overall inflation.

The findings refer to the heat wave that occurred in Europe in 2022, which serves as a notable illustration. The intense heat greatly impacted food production, resulting in a 66% increase in food prices and a 33% spike in inflation overall, according to Kotz. In particular, prices escalated to even higher levels in Romania, Hungary, and certain regions of southern Europe.

“I consider the primary conclusion regarding the historical correlation between regional temperature anomalies and national inflation to be trustworthy,” stated Frances Moore, an environmental economist from the University of California, Davis who was not involved in the research. “The results are significant. The fluctuation in the prices of essential goods, such as food, can be very burdensome for consumers.”

According to Kotz’s analysis, areas and seasons with higher temperatures experience greater inflationary effects on food and other prices. This could mean that regions like Europe and North America may be less impacted compared to the Global South, which may have less ability to handle it.

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Read more of AP’s climate coverage at http://www.apnews.com/climate-and-environment

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You can find Seth Borenstein’s updates on X by searching for @borenbears.

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Source: wral.com