Heatflation: How sizzling temperatures drive up food prices

Vicious heatwaves are sweeping across parts of the world this week, along with the dangers that come with sweltering temperatures: wildfires, dehydration and even death. The hot weather could also push up food prices and make inflation worse.

Western Europe faces muggy temperatures again this week, with the thermostat hovering around 110 degrees in Seville in southern Spain. More than 20 wildfires are burning in Spain and Portugal, and prolonged drought has caused rivers and reservoirs to run so low they are exposing ancient artifacts.

In Italy, hot and dry conditions are expected to destroy at least a third of seasonal rice, corn and animal feed crops. Locusts have swept the island of Sardinia in the worst invasion in three decades, affecting hay and alfalfa production. The European Commission recently downgraded its soft wheat harvest estimates to 125 million tons from 130 million tons – more bad news amid a food shortage sparked by Russia’s blocking of exports from Ukraine. (Russia and Ukraine are among the largest grain exporters in the world.)

A record-breaking heat wave is causing major problems in China worldwide. Roofs are melting, residents are relocating to public cooling zones in underground bomb shelters, and health workers are strapping frozen food to overheated hazmat suits. The Central Meteorological Observatory in Tokyo has warned that the heat could further affect corn and soybean production and worsen inflation. These crops are used to feed pigs, and early-season shortages have already skyrocketed the price of pork, China’s staple food.

When large crops wither, it can affect the ocean and show up on your grocery bill. Inflation in the United States has risen at its fastest rate in 40 years, up 9.1 percent over the past 12 months, much of it the result of rising food and energy prices. The surge was fueled by the pandemic-hit supply chain and by Russia’s invasion of Ukraine. But climate change is also becoming a driver of inflation. Experts warn that heat, floods, drought, wildfires and other disasters are wreaking economic havoc, with worse still to come.

“If we’re going to control inflation, we need to address climate change now,” argued David A. Super, a professor of law and economics at Georgetown, recently in The Hill. Beyond the harvest, climate change has pushed up timber prices and insurance premiums.

“Heatflation” may already have something to do with escalating food costs around the world. A heatwave in India this spring devastated wheat crops and led to an export ban. In the United States last year, scorching heat and drought on the Great Plains scorched the wheat crop and also allowed wheat-eating locust populations to thrive. Grain prices nearly doubled to $10.17 a bushel, the highest since 2008. Extreme temperatures also endanger livestock: The heatwave that swept across much of the country last month killed thousands of cattle in Kansas from heat stress.

“We all know our food bills are rising,” Bob Keefe, author of Climatenomics, told me last month. “One reason is that if crops are lost to storms, drought or flooding, prices will increase.”

In a report last year, researchers at the European Central Bank examined evidence that abnormal temperatures can drive inflation. Looking at seasonal temperatures and price indicators in 48 countries, they found that hot summers had “by far the largest and longest-lasting impact” on food prices. The effect lasted almost a year and was particularly noticeable in developing countries. “We find that higher temperatures have played a non-negligible role in price developments over the past few decades,” the authors conclude.

While climate protection and economic concerns are often played off against one another, evidence is mounting that in many cases they are one and the same.

https://www.salon.com/2022/07/16/heatflation-how-sizzling-temperatures-drive-up-prices_partner/ Heatflation: How sizzling temperatures drive up food prices

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