ECB: High temperatures put pressure on inflation

The European Central Bank (ECB) stated that high temperatures in the summer months can cause more frequent and upward pressures on inflation.

ECB economists Matteo Ciccarelli, Frederike Kuik and Catalina Martínez Hernández examined the relationship between warm weather and inflation based on developments in Germany, France, Italy and Spain, the eurozone’s four largest economies.

Economists have determined that high temperatures in the summer period have an increasing effect on food inflation, especially in these large economies.

INCREASED RISK OF INFLATION PRESSURE

A 1 degree increase in the average monthly temperature caused an increase of about 0.1 to 0.2 points in food inflation the following year. The effects of heat were greater in France, Italy and Spain than in Germany.

Decreased agricultural production, labor productivity and fresh food supply due to extreme temperatures were highlighted as factors influencing the increase in consumer prices.

According to the ECB, the possibility of more frequent and severe heat waves in the summer months as the effects of climate change intensify increases the risk of stronger inflationary pressures in the future. (AA)