How Climate Change Is Fueling Global Food Price Surges

In 2024, global cocoa prices will have increased by 300%, onions in India by 89%, cabbage in Korea by 70%, and European olive oil by 50%, and climate change is to blame.

A recent study by the Barcelona Supercomputing Center has unequivocally demonstrated that extreme weather events, particularly heatwaves and droughts—disasters exacerbated by climate change—are generating sudden spikes in the prices of essential foodstuffs globally. The link between climate change and economic instability is therefore no longer a theoretical projection but already a concrete reality.

The analysis emphasizes that, unfortunately, these are not exceptional events, but rather the new normal. The temperatures recorded during these extreme events are “off the charts,” so much so that in 2024, global temperatures exceeded the 1.5°C threshold for the first time. But the most worrying aspect is the timing: while previous research recorded price spikes over a long period, today we’re talking about them occurring just a few months after the extreme weather event. This makes the phenomenon highly unpredictable and difficult to manage with conventional economic tools.

The economic and financial effects of climate change on food

Heat waves in East Asia throughout 2024 have led to unprecedented monthly temperatures across virtually all of South Korea and Japan, as well as large parts of China and India. In India, a heat wave in May 2023 caused onion prices to soar 89%, while cabbage prices in South Korea soared 70%.

Rice prices in Japan increased 48% following an unusually hot summer, while vegetable prices in China increased 30%. Advanced Western economies have also been significantly impacted. In the United States, the drought that hit California and Arizona in November 2022 led to an 80% increase in vegetable prices. In Europe, however, the prolonged drought in Spain between 2022 and 2023 drastically reduced olive production, causing a 50% increase in the price of olive oil.

In addition to the effects on domestic markets, recent extreme weather events have also increased global prices for important food commodities. For example, Ghana and Côte d’Ivoire produce nearly 60% of the world’s cocoa. Unprecedented monthly temperatures in most of both countries in February 2024, coupled with a prolonged drought in the previous year, led to global cocoa prices increasing by approximately 300% by April 2024 compared to the previous year.

Similar effects of the climate change were observed for coffee following heatwaves and droughts in Vietnam and Brazil in 2024. This interconnectedness of markets highlights how climate risks can rapidly propagate along international supply chains , undermining economic stability even in seemingly less exposed countries.

From a financial perspective, the implications of climate change are enormous

Central banks, already committed to maintaining price stability, could find themselves increasingly challenged to achieve their objectives if extreme weather events make food prices more volatile both domestically and in international markets. The risk is particularly significant for developing countries , where the share of food in the consumer price index is significantly higher than in advanced economies.

Beyond its economic effects, climate-related food inflation could become increasingly politically relevant. History offers numerous examples where rising food prices have heralded political unrest and social upheaval, from the French Revolution to the Russian Revolution, the 2008-2009 food crisis, and the 2011 Arab Spring. Supporting these historical connections, recent studies show a strong correlation between monthly food price increases and the onset of civil unrest.

A more recent example is the 2010 Russian wheat export ban, triggered by heatwave-fueled wildfires, which had a knock-on effect on international prices, sparking bread protests in Mozambique.

The social and health impacts of the climate crisis

The climate change problem is obviously not only macroeconomic but also social. Rising food prices have direct and significant consequences for food security, especially for low-income families.

They are often forced to choose between three problematic options: continue spending the same amount but buy less food (with the real risk of going hungry or having to resort to food assistance); maintain spending unchanged but opt for cheaper and less nutritious foods, especially eliminating fruits and vegetables (which are more expensive in terms of calories); or allocate an even greater portion of their income to food, with inevitable repercussions on the ability to meet other essential expenses.

These dynamics are highly regressive, as they amplify existing disparities between different income levels. Furthermore, the fact that the most significant price increases occur in warmer countries, which are often also poorer, further contributes to exacerbating these imbalances.

Finally, rising food prices due to climate change pose significant risks to public health. When consumers shift toward less expensive options, often at the expense of nutritional quality, or when the cost of basic foods like fresh fruits and vegetables increases significantly due to extreme weather events, the consequences for diets become tangible.

Diet-related diseases, already the leading cause of global mortality, could further intensify. From malnutrition to chronic conditions like type 2 diabetes, coronary heart disease, and some forms of cancer, the effects are particularly severe for children, whose nutritional needs are greater.

Added to this are growing signs of a correlation between food insecurity, poor eating habits, and mental health problems. These factors together pose a concrete threat to health systems, potentially leading to significant increases in public healthcare spending, precisely linked to the spikes in food prices caused by climate change.

For investors attentive to ESG (Environmental, Social, and Governance) criteria, these data require urgent reflection. The climate resilience of food chains, the governance of agricultural policies, and the sustainability of consumption patterns must become priorities in financial strategies. Ignoring these signals means underestimating systemic risks that can impact portfolios, undermine economic security, and amplify geopolitical tensions.

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(Featured image by Karsten Winegeart via Unsplash)

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