A new study reveals that the effects of global warming and extreme heat are poised to escalate headline and food inflation persistently.
Researchers from the Potsdam Institute for Climate Impact Research and the European Central Bank project significant inflationary impacts worldwide due to future temperature conditions.
The study forecasts a potential annual increase of up to 3.23% in food inflation globally by 2035, accompanied by a rise of up to 1.18% in headline inflation over the next decade.
Mitigation Strategies and Policy Implications
Beyond 2035, the magnitude of inflationary pressures diverges across emission scenarios, underscoring the potential efficacy of greenhouse gas mitigation efforts.
The study emphasizes the critical role of decisive emissions reduction in alleviating future inflationary risks.
While climate change-induced inflation is already affecting various sectors, particularly housing and food commodities, the researchers highlight the disproportionate impact on countries in Africa and South America.
They stress the importance of implementing effective policy measures to mitigate inflationary pressures.
Future Outlook and Risk Mitigation
The study outlines scenarios for future inflationary impacts, depending on emission reduction efforts. Under a best-case scenario, inflationary pressures may remain relatively stable by 2060.
However, a worst-case scenario could exacerbate food inflation, exceeding 4% annually across significant parts of the world.
Addressing climate-driven inflation requires a multifaceted approach, including emissions reduction, adaptive policies, and international cooperation.
Failure to mitigate emissions risks exacerbates inflationary impacts, posing significant economic challenges globally.
