Climate change has now moved firmly into the heart of the global economy. One of the clearest signs is the rise of so-called climate inflation, or climateflation, a new form of pressure on prices that affects the agricultural and food sectors in particular.
According to a growing body of scientific literature, rising temperatures are already contributing to the increase in the cost of living. The phenomenon is especially visible in the grocery basket, where the effects of drought, heatwaves and extreme rainfall are becoming increasingly clear.
Climate and food prices, an increasingly evident link
One of the most cited studies on the subject, published in 2024 in Nature, analyzed more than 27,000 monthly consumer price indices across 121 countries. The findings show that rising temperatures cause a significant increase in both food inflation and overall inflation, with effects lasting for at least 12 months.
These shocks are expected to occur more frequently as global warming intensifies. The mechanism is especially clear in agriculture: high temperatures, prolonged drought and extreme rainfall reduce crop productivity, lower yields and destabilize supply.
When production falls, prices rise. In a globalized system, however, the effects do not remain limited to the area affected: local shocks can quickly spread through international markets, increasing volatility and uncertainty.
From Europe to Mexico, the impact on food
The effects are already tangible in several parts of the world. In Europe, the 2022 heatwave helped raise food inflation by between 0.4 and 0.9 percentage points. It was a sign of what could happen again, also in light of the heatwave that hit the continent between late June and early July.
In other regions, extreme events such as floods and droughts have damaged entire agricultural seasons. In Mexico, tomato prices almost doubled compared with the previous year because of a combination of drought, heavy rainfall and humidity-related plant diseases.
In India, where temperatures reached 47°C, analysts revised their inflation forecasts upward. The picture shows how extreme heat can become a direct economic factor, capable of affecting the prices of essential goods.
Kotz: “A new shock every year”
“A situation is emerging that will produce a new shock every year,” Maximilian Kotz, a researcher at the Barcelona Supercomputing Center and co-author of the study “Climate extremes, food price spikes, and their wider societal risks,” told Bloomberg.
According to Kotz, if global warming intensifies, constant upward pressure on prices is likely. The research indicates that by 2035, climate change could add between 0.9 and 3.2 percentage points to global food inflation every year, and up to around 1.2 percentage points to overall inflation.
For central banks, this represents a paradigm shift: climate is becoming a structural factor in price instability.
Coffee, cocoa and vegetables under pressure
As empirical evidence grows, extreme events have already led to significant price spikes for goods such as coffee, cocoa and vegetables. According to some estimates, as temperatures rise, these impacts could intensify by up to 50% in the coming decades.
What appears exceptional today could therefore become the norm, with deep social consequences. Climate inflation mainly affects low-income households, where food spending accounts for a larger share of the budget.
Rising prices reduce access to food and worsen the quality of diets, with effects that go beyond the economy and are reflected in health and social cohesion.
A phenomenon different from traditional inflation
Unlike traditional inflation, often linked to demand dynamics or monetary policies, climate inflation stems from supply shocks. The problem is not excess demand, but a reduction in productive capacity, especially in agriculture.
For this reason, conventional tools such as interest rate increases risk being less effective in countering it. The situation is further complicated by other factors that add up and reinforce one another: rising energy costs, difficulties in fertilizer production and disruptions to supply chains.
The result is a cumulative effect that places additional pressure on food prices.
An open challenge for the economy and consumers
Understanding how the climate crisis will affect inflation in the long term remains an open challenge. Current models rely on historical data that risk becoming rapidly obsolete in a context of accelerated warming.
It is therefore still difficult to estimate the timing, intensity and duration of the effects with precision. However, the direction is clear: as governments, companies and institutions integrate climate risks into economic assessments, consumers are already seeing the signal.