Food prices might be rising already, but climate change could make it worse

Embargoed until: Publicly released: 2024-03-22 03:00

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Global warming could cause an inflation of food prices by up to 3.2% a year in a decade's time, according to international research. The researchers used data on weather and consumer price indices across the world to see how they have been related in the past, and used that to project how current climate forecasts might impact food prices and inflation in general around the world. They say at the temperatures we're likely to have in 2035, food inflation would likely rise by between 0.9% and 3.2% a year, with overall inflation rising by between 0.3% and 1.2%. While the researchers didn't have data from Australia and New Zealand, they say other parts of the global south are likely to be most affected by this.

News release

From: Springer Nature

Climate change: Global warming may further inflate food prices

Global warming may lead to food inflation rising by up to 3.2 percentage points per year and overall inflation rising by up to 1.2 percentage points per year under temperature increases projected for 2035, according to a paper published in Communications Earth & Environment. The findings also suggest that, although both high- and low-income countries will experience climate-driven inflation, countries in the global south will be more affected.

The global economy is sensitive to climate change and extreme weather through the impact on food production, labor, energy demand, and human health. Understanding how weather may impact inflation can help predict how future climate change may impact inflation risk and the global economy.

Kotz and colleagues analyzed monthly national consumer price indices and weather data across 121 countries between 1991 – 2020, combining the results with projections from a physical climate model to estimate impacts on inflation under future warming between 2030 and 2060. They estimated that under temperature increases projected for 2035 global warming will lead to food inflation rising by between 0.9 and 3.2 percentage points per year, with overall inflation rising by between 0.3 and 1.2 percentage points per year. The authors predict that this will affect both high- and low-income countries, but generally have a greater impact on the global south, especially countries in Africa and South America.

The projections suggest that rising temperatures increase inflation year-round in low-latitude regions, while this effect only occurs in summer at higher latitudes. Additionally, the authors estimate that the 2022 summer heat extremes increased food inflation in Europe by 0.67 percentage points, and this increase could be amplified by between 30 and 50 percent under 2035 warming scenarios.

The authors suggest that climate change is likely to increase the price of food in the future, but mitigation of greenhouse gas emissions and technology-based adaptations could substantially limit this risk to the global economy.

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Journal/
conference: Communications Earth & Environment

Research:Paper

Organisation/s: Potsdam Institute for Climate Impact Research, Germany

Funder: We gratefully acknowledge the work of Miles Parker and Chiara Osbat in collecting the data on consumer price indices and providing it to us prior to its publication. We also thank them both for insightful feedback on early versions of the manuscript. MK gratefully acknowledges funding from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the Government of the Federal Republic of Germany and Federal Ministry for Economic Cooperation and Development (BMZ). Part of the work for this paper was also conducted during a joint project procured by the European Central Bank. We note that the views expressed are those of the authors and should not be reported as representing the views of the European Central Bank (ECB) or the Eurosystem.

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