Nation Thailand
Climateflation drives up food prices and living costs
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Climate change is becoming a direct inflationary force in the global economy, with extreme heat damaging crops, lifting food prices and feeding through to insurance, energy and healthcare costs.
Key facts
- Research by Maximilian Kotz of the Potsdam Institute for Climate Impact Research found that higher temperatures alone could increase annual global food inflation by as much as 3.2% by 2035.
- Researchers estimated that climate change contributed to an average US$360 increase in home insurance premiums between 1990 and 2023.
- Electricity and cooking-gas costs have increased across much of the world, while US residential electricity prices have climbed by nearly 40% since 2021.
- Under current policies, a 2-degree-Celsius rise in global temperatures by 2100 could reduce global GDP per capita by more than 50%.
- Merlot said as much as 70% of his soybean crop was damaged.
- Olive oil prices rose by 50% following drought on the Iberian Peninsula, while cocoa prices surged by as much as 280% after heatwaves in West Africa.
Summary
SustaiNation
Known as “climateflation”, the phenomenon occurs when climate change and extreme weather push up prices and living costs by reducing agricultural output, disrupting supply chains and increasing production expenses.