World | Deutsche Welle
· collected 2026-08-21 · by Astrid Prange de Oliveira
Research has shown that droughts and extreme weather conditions in Germany and Europe are contributing to rising costs, with transport costs increasing significantly due to reduced cargo capacity on rivers like the Rhine. According to the Food and Agriculture Organization of the United Nations (FAO), food prices are currently 30% higher than in 2020, with meat and oilseeds experiencing sharp price increases. A study by the European Central Bank (ECB) found that climate change and extreme weather events can lead to persistent upward pressures on inflation, particularly from extreme temperatures in summer. The ECB is considering whether to raise interest rates again due to increased costs, which could hamper economic growth.
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So far, research institutes have not been able to quantify the impact of extreme weather conditions on inflation in Germany, but there are clear trends.
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institutes → quantify → Germany
"If ships on the Rhine can only carry a fraction of their usual cargo, transport costs per metric ton will rise significantly," Torsten Schmidt, an economist at the RWI – Leibniz Institute for Economic Research, told DW.
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Schmidt → carry → DW
He added that this would drive up the cost of energy sources, such as diesel and heating oil, which are in large part transported by water.
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which → add → water
He said that higher costs would be passed on to consumers.
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costs → say → consumers
For its data, the Food and Agriculture Organization of the United Nations (FAO) takes into account the effects of global warming, extreme weather and crop losses.
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Organization → take → warming
According to the FAO, food prices are currently about 30% higher than in 2020, with meat and oilseeds rising sharply since then.
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meat → accord → 2020
Inflation driven by extreme weather and energy shocks
Recent studies also suggest that climate change and extreme weather events are affecting inflation rates, as are supply bottlenecks as well as gas and oil price shocks caused by the US-Iran and Russia-Ukraine wars.
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bottlenecks → drive → wars
A study conducted by the European Central Bank (ECB) and five European research institutes entitled "Climate extremes, food price spikes, and their wider societal risks" that was published in July 2025, warned against escalating inflation.
"Central bank mandates for price stability may become increasingly challenging to deliver if more frequent extreme weather events make food prices less stable domestically and in global markets," the study states.
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study → conduct → markets
Higher coffee prices in Brazil or Vietnam can also affect inflation in the EU.
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prices → affect → EU
Will ECB raise interest rates again?
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ECB → raise → rates
These challenges could become even more trying if temperature rises have a long-term effect on inflation.
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rises → become → inflation
If inflation has to be dealt with by higher interest rates, economic growth will also be hampered.
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growth → have → rates
In 2023, the ECB published a study called "The asymmetric effects of weather shocks on euro area inflation" that reached a similar conclusion after examining the four largest European Union economies.
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that → publish → economies
"With a changing climate implying an increased frequency and severity of extremes in Europe, the shocks studied here can be expected to occur more frequently and could lead to persistent upward pressures on inflation, especially from extreme temperatures in summer," it read.
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it → change → summer
"Given the differing impacts of shocks in different seasons and across countries, our results also suggest that climate change could enhance heterogeneity of inflation developments across euro area countries.
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change → give → countries
According to the ECB, the inflation rate in the euro area in June this year ranged from 2% in France to 5.4% in Lithuania.
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rate → accord → Lithuania
High transport costs, at 5.3%, are driving inflation.
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costs → drive → inflation
Whether the ECB will raise key interest rates again in view of increased costs on waterways remains to be seen.
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raise → raise → waterways
On June 11, it raised the deposit rate by 0.25 percentage points to 2.25%.
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it → raise → %
"For monetary policy, the key question is whether this is a one-time, temporary spike in costs or whether the effect is being compounded by other factors that are driving up prices, such as energy prices resulting from the war in Iran," explained Schmidt from the RWI.
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Schmidt → compound → RWI
He predicted that a "weather-related price spike" would probably not lead to "tighter monetary policy" but suggested the situation would be different if multiple crises coincided, resulting in "wider, more persistent inflation that the ECB could no longer ignore."
Holger Schulz, a financial expert with the German Savings Banks Association (DSGV), recommended in a statement that the "German economy should return to operating with higher inventory levels.
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economy → predict → levels
He explained that this was the lesson learned from recent supply chain crises.
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this → explain → crises
Whether the COVID-19 crisis, the war in Ukraine or the closure of the Strait of Hormuz,” he said, "higher inventory levels are a kind of insurance premium in a world that is so unpredictable on so many fronts.
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that → say → fronts
This article was originally published in German.
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article → publish → German
