Australians face even higher prices at the supermarket by 2035 as the disastrous effects of the climate crisis wreak havoc on global supply chains, a landmark report has warned.

Research published on Friday by the Potsdam Institute in Germany and the European Central Bank found rising temperatures could drive up food inflation by 3.2 per cent within 14 years.

“The impact spans across all nations, with hot regions and summers being most affected and suggests that future warming will worsen these effects,” researchers stated in a paper published in Nature.

The effects of more frequent extreme weather events are already being felt at supermarkets around the world, with a European heatwave in 2022 estimated to have pushed food inflation up 0.6 percentage points.

In Australia, shoppers suffered through a massive spike in meat, fresh fruit and vegetable prices in 2021 after widespread flooding across New South Wales and Queensland, catastrophic events that scientists have warned could become more frequent in coming decades.

The market has only recently recovered from those disasters, with prices for fresh food starting to ease over the past six months amid increased scrutiny on Coles and Woolworths.

That’s little comfort for households because it has come amid a wider cost of living squeeze at the supermarket and in most other facets of the economy, including housing costs.

Climate to drive inflation

The Potsdam study considered how higher temperatures affect food inflation, including how periods of extreme heat and precipitation can increase what people pay for groceries.

Using data from 27,000 price measures globally, they found that high- and low-income countries suffer higher food prices for around 12 months after experiencing very high temperatures.

“Evaluating these results under temperature increases projected for 2035 implies upwards pressures on food and headline inflation,’’ the researchers said.

“The future changes in weather conditions expected due to greenhouse gas emissions imply considerable welfare losses,” they said.

A series of Australian-focused research has reached similar conclusions about food prices and the climate crisis in recent years, including a 2022 study from the University of Sydney, which warned of a “domino effect” on food supply chains from more hazardous weather conditions.

But the Potsdam research is significant because it is a major attempt to estimate the global effects on food price inflation, which ultimately drive what Australians pay at local supermarkets.

Challenge for RBA

It presents a challenge for the Reserve Bank too, because efforts to ensure inflation remains in the 2-3 per cent target band will increasingly be disrupted by climate-related supply shocks.

And because the RBA’s typical response to high inflation is increasing interest rates, that creates an additional risk for households too, particularly after the most recent spike in repayments.

Former Reserve Bank governor Philip Lowe has warned about that persistently in recent years, having steered the nation’s central bank through a huge spike in food prices after COVID-19.

“It will be difficult to return to the earlier world in which inflation tracked in a very narrow range,” he said in his final speech as RBA boss last year.

“The increased prevalence of supply shocks, deglobalisation, climate change, the energy transition and shifts in demographics mean either steeper supply curves or more variable supply curves.”