The connection between extreme weather, such as the ongoing heat in particular Southern Europe, and economic indicators such as inflation and GDP is too important to ignore, says ECB member Frank Elderson in an interview with the news agency Bloomberg.
Take the unusually hot summer of 2022, food price inflation rose by between 0.4 and 0.9 percentage points, and it was a fairly measurable effect on German GDP growth, he says.
According to him, economists have learned to understand that there is an important connection between the climate crisis and its effects on the economy.
Researchers have seen that a warmer planet risks price stability. Agriculture can be negatively affected and food prices tend to increase. The heat can thus indirectly affect future interest rate decisions from the European Central Bank (ECB), Elderson reasons.
The transition to a different climate can periodically mean fluctuations in prices in a way that we have not seen before, says Torbjörn Isaksson to TT.
Sweden has mainly a lot of imports of fruit and vegetables.
So it's clear that if there is drought and poor harvests, it can affect. But so far, I have not seen any signs of that really, says Isaksson.
