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climate
/ˈklaɪ.mət/
noun
the weather conditions prevailing in an area in general or over a long period.
-flation
[fley-shuhn]/fleɪ ʃən /
noun
Economics. a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency
We have Swiftflation (the surge in economic activity that has accompanied Taylor Swift in each city she has toured), stagflation (slow economic growth, high unemployment, and rising prices), shrinkflation (when the quantity of a product shrinks while its price remains the same). And now, climateflation. Particularly acute now, climateflation speaks to the impact our climate crisis has on the price of goods.
Some climateflation is straightforward: As temperatures rise on average, the sound of air conditioners humming in homes over a longer, hotter summer means higher cooling costs. Roads that buckle in the heat require taxpayer money to repair. Increased flooding and wildfires drive insurance costs up.
But climateflation also takes stock of less obvious cost increases.
“Central banks have been spearheading climate inflation research, motivated by their intense focus on keeping prices stable,” the LA Times reports. “In the past, weather-related price spikes have often proved temporary, allowing central banks to avoid raising interest rates. But as extreme weather events increase, intensify and hit important sectors such as food, that might have to change.”
Some would argue that it already has.
In 2024, the price of cocoa tripled over a year, hitting $10,000/ton for the first time. Why the jump? Basic supply and demand. Drought and disease in West Africa, where most cocoa beans grow, dramatically reduced crop yields. A diminished supply, faced with consistent demand, meant higher prices.
And it’s not just the cost of items themselves that’s going up. Getting those items to us — typically via shipping routes — has become more fraught and more costly as drought has rendered unnavigable certain key waterways, such as the Panama Canal, which handles about 5% of global trade and has had to reduce the traffic it allows through. Rerouting usually means that goods have to make longer (and thus more expensive) trips to get to their destinations.
Climate change is an underappreciated cause of higher prices, Pascal Thériault, an agricultural economist at McGill University in Montreal, told a CBC reporter.
While climate-driven natural disasters can wreak havoc on prices in the short term, it’s the slow-moving changes that can drive prices up and keep them there. Examples include the droughts or heavy rains that impact crop yields, the heat that kills animals we eat, and the pests (on the rise in certain areas due to warming temperatures) that devour crops.
Scientists, like so many others, are fighting back. In Zambia, for instance, a resilient new chicken breed called the Zambro is helping farmers adapt to extreme heat and drought. These hardy birds grow quickly, lay plenty of eggs, and require less food and water than other chickens.
Economists continue to sift through the data to determine just how — and how much — climate will continue to impact prices. But there’s little doubt that, as temperatures continue to rise, so does the cost of just about everything.
