Heatflation: How global warming contributes to a rise in prices

Global warming is seen as a key factor driving inflation. Image: Shutterstock

Episodes of drought, flooding, and deep-freeze ... There are a large variety of extreme weather conditions that jeopardize the production of raw materials, and therefore have a direct effect on our wallets! Global warming is now clearly included among the factors leading to inflation. And now the phenomenon has a name: "heatflation."

Mustard shortages due to severe droughts in Canada, the world's largest producer and exporter of mustard seeds; dwindling stocks of chickpeas, whose US reserves have shrunk by 10% over the past two years; soaring temperatures in northern Italy that jeopardize the cultivation of arborio rice (used in risotto), as well as that of tomatoes and olives; plus deterioration of Brazilian harvests, down n by nearly 30% because of frost or flooding, that result in higher coffee prices.

All around the world, poor harvests of a whole range of foods are making headlines, many of which are so severe that several potential shortages are being predicted. At best, climate disasters cause prices to rise, explained Nicolas Léger, who works for the international firm NielsenIQ, in an interview with the ETX Studio news agency. "Weather conditions account for the inflationary prices seen in a large number of food product categories."  The expert specified that the whopping increase in prices cannot be primarily attributed to the situation resulting from Russia's invasion of Ukraine, except in the category of cooking oils.

We've been warned...

Scientists have been warning consumers for years that global warming—if not effectively slowed down—will not only have dramatic effects on the planet's resources, but will also have financial consequences. A few days ago, American environmental magazine Grist even used a neologism to define the phenomenon: "heatflation"—a contraction of "heat"and "inflation." The article was based on the words of David A. Super, a professor of law at Georgetown University in the United States, who had earlier told media outlet The Hill that "If we wish to control inflation, we must address climate change now."  

As Europe confronts another heatwave, the European Central Bank's earlier warning about unusual temperatures leading to inflation in the medium term rings true. The analysis was included in a report published last December and covered no less than 48 countries. We can't feign ignorance, since last February renowned American magazine The Atlantic was already calling this climate-economic phenomenon "Greenflation."

It remains to be seen what crops and food products will be affected next.