UK's Record-Breaking Heatwave Costs Billions, Not Just in Food Prices
The UK has experienced its warmest June on record since 1884, with temperatures exceeding two standard deviations above the 1970 to 2000 norm on 35 days. This extreme heatwave led to concerns about food prices and inflation.
A study by CEBR found that the commodity and input cost pressures navigating through the supply chain could add up to 1.1 percentage points to food inflation by mid-to-late next year, lifting it back above 3% and adding 0.12 percentage points to headline CPI. However, this increase is mostly attributed to the escalation of conflict in the Middle East from February rather than the British summer.
The direct contribution of this summer's heat to food inflation is minimal, accounting for less than a tenth of the total impact, equivalent to 0.11 percentage points on food inflation. This can be attributed to the fact that British crops entered the summer in unusually good condition, with AHDB rating 58% of UK winter wheat as good or excellent in late June.
The real cost of this summer's heat is in lost productivity, with CEBR estimates suggesting around £280 million was lost in a single week. This is not evenly distributed, with almost £180 million concentrated in the City of London and over £50 million in rural England. Independent work by the Grantham Research Institute on Climate Change and the Environment at the LSE and the Euro Mediterranean Center on Climate Change puts the national cost of the same week in excess of £1 billion and 24 million lost working hours.