Inflation UK: How Climate Change Could Worsen the Rise in Prices
These days, in the midst of the unfathomable inflation we’re all experiencing – I go to the grocery store every couple of days to see if the price for something has dropped or not. Purchasing items has to be done more strategically during a rise in inflation, and inflation in the U.K. is no exception to this.
The problem with inflation is that it makes prices for daily necessities skyrocket, even if people’s salaries aren’t increasing alongside inflation. But did you know that ignoring climate change could make inflation even worse than it already is?
How can inflation in the U.K. be impacted by the worsening state of climate change?
Why is inflation occurring in the United Kingdom?
Inflation has already been on the rise as of late – with or without the added potential consequences of climate change. In fact, inflation is so bad – that the Consumer Prices Index, or CPI for short, measured overall prices of goods to be 10% higher this past September in comparison to last year.
Why have prices risen so dramatically in the short time span of twelve months?
Following the pandemic, there has been an exceptional rise in demand from consumers that have outnumbered the available supply – which serves as a primary reason behind inflation around the world and in the U.K. However, more notably and in correlation to the effect climate change has had and will continue to have on inflation, are the rising prices in energy and petrol. Domestic prices for petrol have increased by a whopping 96%, and electricity prices by 54% – and are only continuing to rise in the midst of the Russia-Ukraine crisis, where Russia has subsequently reduced its electricity and gas supply to the United Kingdom and across the European Union. In short, the humanitarian and political impact of the Russia-Ukraine conflict have greatly affected the global economy, such as inflation in the United Kingdom.
However, rising energy prices are the most pivotal problem in terms of facing inflation in the U.K.
How will the U.K. try and avoid inflation in the midst of the rise in electricity prices?
The classic mantra for inflation goes like this – if it’s in supply, but low demand, the prices will be low. However, something that is in high demand but can’t meet the supply, inevitably becomes more expensive as it’s more difficult to source for all of those demanding the product or service.
In order to combat this, the U.K. has considered energy rationing or full on blackouts this winter to decrease the demand for electricity – and in addition, help to combat climate change. However, this proposal to implement energy rationing would more so be to compensate for the shortage of electricity supply across the United Kingdom due to the already existing inflation caused by the ongoing conflicts in Ukraine and Russia.
👉Energy rationing is a method of cutting off electricity supply during peak hours of use in order to mitigate excessive electrical consumption. For instance, the U.K. might cut off electricity from 7AM to 10AM, and again from 4PM to 9PM. While this would help to reduce the electricity costs fueled by inflation in the U.K., as well as reduce the United Kingdom’s greenhouse gas emissions exponentially this winter – it could prove catastrophic as well, as many work remotely from home and depend on the internet to meet their basic needs.
The U.K. has made clear that energy rationing or blackouts are not set in stone, but could ignoring climate change amidst the uptick in U.K. inflation give the country no other choice?
How is climate change affecting the current rise in inflation?
Unbeknownst to much of the U.K. and the rest of the world, the current predicament regarding climate change could be feeding into the global problem of inflation.
Without realizing it, climate change is currently affecting many sectors of the economy by making it difficult for various businesses and organizations to allocate the resources necessary to bring their product or service to fruition. The two industries that are directly impacted by climate change that can drastically alter the course of inflation are agriculture and energy.
The dependency on fossil fuels for many countries to follow through with their daily functions have exacerbated the rise in inflation, as energy costs are becoming overwhelmingly expensive due to the decrease in supply from Russia following the ongoing conflict with Ukraine. The continued high carbon taxes on typical fossil fuels will continue to put pressure on inflation in the U.K., and those taxes will only continue to increase across the industry – ultimately affecting the prices of other products and services in various sectors and making inflation even more prevalent than it already is. Until the use of renewable energy is adequately implemented across the U.K., inflation will continue to persist.
In addition to the decreased availability of fossil fuels aggravating inflation, the agricultural sector is greatly impacted by climate change as well – and can also provoke inflationary pressures.
According to the FAO, otherwise known as the UN Food and Agriculture Organization – prices for food around the world have never been higher as of March 2022. You may be wondering how climate change could make a bag of rice or the pumpkin you want to buy for Halloween more expensive, but it’s quite simple – disastrous, unpredictable weather has a direct impact on the success of a harvest season.
👉If climate change continues to provoke unprecedented weather, then harvest seasons will continue to be inconsistent – meaning that the typical amount of produce a farmer would usually be able to provide to a grocery store will inherently be less than usual, without the impacts of climate change.
Say a pumpkin patch was supposed to produce 100 pounds of pumpkin, but only was able to produce 80 pounds of pumpkin. There is immediately a lower supply of pumpkins, but it doesn’t change the fact that people want to buy pumpkins for fall festivities like Halloween or Thanksgiving. Therefore, the prices of the pumpkin are bound to increase – as the demand for pumpkin has remained the same.
Could climate change continue to impact sectors like agriculture and energy, and skyrocket prices even further?
How can climate change make inflation in the U.K. even worse than it already is?
The consequences of climate change are likely to worsen the state of inflation as time goes on. Although
Climate change isn’t likely to be viewed as a reason for global skyrocketing prices – climate change will continue to be the root cause of several severe weather events. As these deleterious weather patterns continue to increase in frequency and wreck the industries that contribute to the economy the most. In short, as long as global surface temperatures are on the rise, the more that these industries will suffer from a lack of finite resources – causing what will seem like a never-ending uptick in prices.
The two most important industries that will continue to suffer from inflation alongside global warming are energy and agriculture, with the latter possibly suffering the most if climate change continues to impact the industry at the rate that it is. In short, it’ll be next to impossible to grow crops in an inhospitable environment – meaning the prices of food will skyrocket like never before.
Climate change could impact inflation in other ways, too. For example, unforeseen weather could deter tourists from spending money in the tourism industry – as they’ll be forced to cancel their trips more often, making the optimal times to travel to a certain destination each season even shorter than the last. Also, climate change can impact the transportation sector, and communities as a whole due to the impact climate change will continue to have on the energy sector.
All in all, it’s evident that climate change can serve as a domino effect – impacting several different sectors and ultimately, influencing inflation as well. Is there anything that can be done to tame both of the beasts?
What can the U.K. do to mitigate both inflation and climate change?
Inflation, unfortunately – isn’t usually in the jurisdiction of a particular country, especially when inflation is impacting nearly every country in the world. However, the U.K. can do something about climate change – and they’ve already started to implement many of the ideas and plans necessary to combat this global warming crisis.
For instance, one of the most important things that the U.K., and all countries around the world can do to mitigate both inflation and climate change is to implement the use of renewable energy – which will both help to reduce emissions, and the dependence on fossil fuels that continue to rise in price amongst this period of global inflation. However, reducing the consumption of finite fossil fuels or improving energy efficiency isn’t the only component or predicament to face when fighting against climate change: we need to get better at recycling, build more sustainable businesses, and recognise how we could reduce our own individual carbon footprint every day through simple things we wouldn’t think of otherwise – such as through our fashion choices or our eating habits.
Farmers that are suffering in the midst of both inflation and climate change should seek to implement climate smart farming in their farming tactics, and while it can’t mitigate the effects of climate change on their sector entirely – it could help.
The U.K. has already made their newfound, aspirational environmental goals well-known to the public: such as by publishing the U.K. Environment Act of 2021, the Ten Point Plan, their U.K. Hydrogen Strategy, and the CMA’s new guidelines for the U.K. to meet their environmental goals. Some of these plans are more intact and ready-for-action than others, but still – the U.K. has delineated their efforts to improve their positive environmental impact, fight against climate change, and ultimately prevent inflation from growing out of control.
Inflation and climate change may not go hand in hand, but countries like the U.K. have already recognised the direct impact that one global catastrophe can have on another – and it’s until the world conjoins in the fight against climate change that inflation, amongst other devastating occurrences, can finally dwindle down.
What about Greenly?
If reading this article about inflation in the U.K. and how climate change can continue to impact inflation has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.