Heatflation Leading To Inflation
Heat waves are sweeping areas of the world, bringing with them the hazards that come with them: wildfires, dehydration, and even death. The warmer weather may also raise food prices, exacerbating inflation. Western Europe has been experiencing scorching temperatures; the thermostat in Seville, southern Spain, reached triple digits more than 20 times in July. More than 20 wildfires were also burning in Spain and Portugal, and the ongoing drought has caused rivers and reservoirs to run so low that historic relics are being exposed.
The hot and dry weather in Italy are predicted to destroy at least one-third of the seasonal harvest of rice, corn, and animal feed. Locusts descended on the island of Sardinia in the greatest invasion in three decades, threatening hay and alfalfa output. The European Commission recently reduced its soft-wheat harvest projections from 130 million tons to 125 million tons, adding to the bad news in the midst of a food scarcity caused by Russia's blockade of Ukrainian exports. Russia and Ukraine are two of the world's largest grain exporters.
A record-breaking heat wave is causing serious issues in China and the world. Roofs are melting, people are moving to public cooling zones in underground air-raid shelters, and health workers are attaching frozen food to their overheated hazmat suits. The Central Meteorological Observatory in Tokyo has warned that the heat will harm corn and soy output, exacerbating inflation. These crops are fed to pigs, and early-season failures have already driven up the price of pork, China's staple meat.
Food Costs and Climate Change
When big crops fail, the consequences can be felt across the seas and reflected in your shopping cost. In the United States, inflation has risen at the fastest rate in 40 years, rising 9.1 percent in the last year, owing largely to rising food and energy prices. The pandemic-ravaged supply chain, as well as Russia's invasion of Ukraine, have fueled the spike. However, climate change is also becoming a driver of inflation. Experts warn that heat, flooding, drought, wildfires, and other disasters are causing havoc on the economy, with worse to come.
"If we want to reduce inflation, we must handle climate change now," argued David A. Super, a Georgetown law and economics professor, in The Hill. Aside from agriculture, climate change has increased the cost of lumber and insurance premiums. "Heatflation" may already be contributing to rising food prices around the world. A heat wave in India this spring destroyed wheat crop, prompting the country to halt exports. Last year, scorching heat and dryness in the Great Plains destroyed the wheat harvest while simultaneously allowing wheat-munching grasshopper populations to thrive. The price of wheat nearly doubled to $10.17 per bushel, the highest level since 2008.
Extreme temperatures also threaten livestock: a heat wave that swept through much of the country in June killed thousands of cattle in Kansas due to heat stress. "We all know our grocery expenditures are going up," Bob Keefe, author of the book "Climatenomics," told us in June. "Part of the reason is that when crops are lost due to storms, drought, or flooding, prices rise."
Temperatures Do Influence Inflation
Researchers at the European Central Bank evaluated the evidence that extreme temperatures can drive inflation in a December 2021 paper. They discovered that hot summers had "by far the strongest and longest-lasting impact" on food prices when they examined seasonal temperatures and price indicators in 48 nations. The impact lasted over a year and was most visible in underdeveloped countries. "We find that increasing temperatures have played a non-negligible effect in driving price changes in recent decades," the scientists stated. While climate action and economic concerns are sometimes set against one another, evidence is mounting that they are, in many circumstances, one and the same.