Climate inflation: peak or trend?

Visual representation of the tension between the economy and climate, symbolizing the impact of the environmental crisis on global prices.

Is climate inflation here to stay?

The concept of climate inflation has gone from being an academic abstraction to directly influencing public policy, markets, and the global cost of living. With hurricanes devastating crops, prolonged droughts disrupting supply chains, and urban flooding destroying infrastructure, extreme weather is putting more frequent and intense pressure on the economy. But the question lingers: are we facing a temporary spike or a structural trend?

What is climate inflation?

Climate inflation is the persistent rise in prices caused by extreme weather events that affect the supply and logistics of goods and services. It differs from traditional inflation—such as demand-pull or cost-push inflation—because it is anchored in environmental instability.

📌 Practical examples:

The failure of wheat crops in Canada and the USA in 2023, due to record heat waves, raised the global price of the cereal by more than 30% in just 4 months (FAO, 2023).

By 2025, . Cabbage has risen 70% in Korea, onion 89% in India and rice 48% in Japan.

The Impact Triad: Agriculture, Energy, and Insurance

1. Agribusiness in check

Torrential rains and droughts are making agriculture less predictable and more expensive. The rising cost of staple foods is already reflected in consumer inflation rates.

2. Energy under pressure

Low reservoir levels impact hydroelectric generation. This forces countries to turn to more expensive and polluting sources, generating side effects both for the environment and for consumers.

3. Insurance sector in crisis

Insurance companies have recorded historic losses due to natural disasters. The result? Higher premiums and reduced coverage in high-risk areas, increasing social insecurity.

Structural or momentary inflation?

The 2024 World Bank report indicates that extreme events are becoming more frequent, making climate-related inflation a structural trend. According to the IMF (2024), approximately 20% of global inflation between 2020 and 2023 can be attributed to climate-related factors.

> "Climate inflation is the new normal, and economic policies need to adapt to this reality."

— Kristalina Georgieva, Managing Director of the IMF

Latin America: epicenter of vulnerability

The American continent, especially Latin America, suffers from a dual impact: it is highly dependent on agricultural commodities and has low climate resilience. This makes countries like Brazil, Argentina, and Mexico particularly sensitive to climate-related inflation.

🔍 Emblematic case:

In 2022, the historic drought in the La Plata Basin reduced corn production by 40% in Argentina, one of the world's largest exporters.

The role of geopolitics and the green transition

Climate inflation is also a driver of geopolitical instability. Countries that depend on food or energy exports are reviewing their contracts, which impacts global prices. At the same time, the race for energy transition is pushing up the costs of rare earth minerals and technological components, which fuels inflation.

🎥 Recommended video:

How weather affects the market – YouTube/BomDiaAmérica

Are we prepared for this?

Most countries have not yet incorporated climate-related inflation into their economic forecasting models. Central banks are hesitant to raise interest rates for reasons beyond their control, which reduces the effectiveness of conventional monetary policy.

Possible solutions

Mapping climate risks in the production chain

Sovereign wealth funds for climate adaptation

Incentives for regenerative agriculture and clean energy

Climate financial education for the population

And the consumer? What should he do?

You may not control the weather, but you can better prepare:

🛒 Recommended products:

1. Book "The Future We Choose " – Amazon

2. Home Weather Station with Sensors – Amazon

3. Online course: " How to invest in times of climate crisis" – Hotmart

Conclusion: Tomorrow starts now

Climate inflation is no longer a distant specter: it's on your plate, in your pocket, and in your future. Addressing this issue urgently is not only an economic action, but also a collective responsibility.

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References

FAO – Food and Agriculture Organization.

Crop prospects and food situation – Quarterly global report. Rome: FAO, 2023. Available at: https://www.fao.org/giews/reports/crop-prospects/en/. Accessed on: July 22, 2025.

IMF – International Monetary Fund.

World Economic Outlook – Climate Challenges. Washington, DC: International Monetary Fund, 2024. Available at: https://www.imf.org/en/Publications/WEO. Accessed: July 22, 2025.

WORLD BANK.

Global Economic Prospects – Climate Resilience and Growth. Washington, DC: World Bank, 2024. Available at: https://www.worldbank.org/en/publication/global-economic-prospects. Accessed: July 22, 2025.

GEORGIEVA, Kristalina.

Speech on climate economics at the Davos Economic Forum. Davos, January 17, 2024. Available at: https://www.imf.org/en/News/Speeches/2024/KG-Davos-Speech. Accessed: July 22, 2025.

OECD – Organization for Economic Co-operation and Development.

Climate Change and Economic Resilience: Policy Approaches. Paris: OECD Publishing, 2023. Available at: https://www.oecd.org/environment/climate-change-and-economic-resilience.pdf. Accessed: July 22, 2025.

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