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MNI BRIEF: Climate Impact On Food, Headline Inflation-Study

(MNI) London

Global warming will lead to annual increases in the cost of food of between 0.92-3.23% by 2035, and add 0.32-1.18% each year to headline inflation, a working paper published Tuesday by the ECB claims. Extreme heat in 2022 is thought to have increased food inflation by 0.67%, with seasonal effects amplifying the effects of climate change on inflation by 50%, the paper says.

The ECB has argued that climate change is a source of both price and financial stability risk, placing measures to mitigate its effects within its mandate, raising the prospect of preferential central bank loans (see MNI INTERVIEW: ECB To Hike To 4% - Ex-Bank Of France Economist). But there are limitations in describing a “comprehensive and general relationship” between climate and inflation, the study’s authors write.
MNI Frankfurt Bureau | +49-69-720-146 |
MNI Frankfurt Bureau | +49-69-720-146 |

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