By SETH BORENSTEIN (AP Science Writer)
The cost of food and overall inflation will go up as temperatures rise due to climate change, according to a new study conducted by an environmental scientist and the European Central Bank.
By examining the monthly prices of food and other products, as well as temperatures and other climate factors in 121 countries since 1996, researchers have estimated that “weather and climate shocks” will cause food prices to increase by 1.5 to 1.8 percentage points annually within the next ten years, especially in already hot regions like the Middle East, as stated in a study published in the journal Communications, Earth and the Environment on Thursday.
This will result in an overall inflation increase of 0.8 to 0.9 percentage points by 2035, solely due to extreme weather events caused by climate change, as indicated by the study.
While these percentages may seem small, they are significant to institutions like the U.S. Federal Reserve that combat inflation, according to lead study author Max Kotz, a climate scientist at the Potsdam Institute for Climate Impact Research in Germany.
In Kotz's words, “The physical impacts of climate change will continuously affect inflation,” he said. “This is another example of how climate change can harm human and economic well-being.”
By 2060, the climate-related portion of inflation is projected to grow, with global food prices expected to rise by 2.2 to 4.3 percentage points annually, leading to a 1.1 to 2.2 percentage point increase in overall inflation, according to the study.
According to Gernot Wagner, a climate economist at Columbia University’s business school who was not involved in the research, what he refers to as “climateflation” is “undeniably real, and the numbers are quite striking.”
Kotz and European Bank economists analyzed 20,000 data points to establish a concrete real-world connection between extreme weather, particularly heat, and rising prices. They then looked ahead to see what is expected in terms of climate change and were alarmed by the projected impact on prices.
According to Kotz, when economists typically discuss inflation and climate change, they focus on the increase in energy prices as a response to attempts to reduce global warming, but that is only one aspect of the issue.
“We are aware of these productivity setbacks resulting from climate change, the weather phenomena triggered by climate change, such as heat waves, which reduce agricultural output,” Kotz mentioned. “These factors also have a ripple effect on food price increases and overall inflation.”
The study cites the 2022 European heat wave as a prime example. The excessive heat led to a decrease in food supplies, causing a two-thirds of a percentage point increase in food prices and a one-third of a percentage point rise in overall inflation, as per Kotz. Prices rose even higher in Romania, Hungary, and certain parts of southern Europe.
“I find the main result regarding the historical connection between regional temperature anomalies and national inflation to be credible,” stated Frances Moore, an environmental economist at the University of California, Davis, who was not involved in the study. “The findings are significant. Price fluctuations in essential goods such as food can be very challenging for consumers.”
Kotz mentioned that the study discovered that higher temperatures cause more inflationary pressure on food and other prices, especially in hotter areas and seasons. He also noted that Europe and North America may not experience as much impact as the Global South, which may be less able to handle it financially.
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