The Impact of Global Weather Events on UK Food Inflation: A Quantitative Study

Authors: India Rimmer, Hannah Copeland, Boromeus Wanengkirtyo

As global extreme weather events become more frequent, their effects ripple through to food prices in the UK. According to the August 2025 Monetary Policy Report, UK food inflation averaged 4.2% in 2025, with its peak hitting 5.1% in August. This suggests that weather-related disruptions have increasingly influenced food prices, raising questions about the extent of their impact.

Examining Factors Contributing to Rising Food Prices

Various elements have contributed to this rise in food inflation, including escalating labor costs and the introduction of new packaging regulations that have increased operational expenses for UK food producers. However, the role of global weather shocks in exacerbating food inflation cannot be underestimated. Notably, inclement weather conditions such as droughts in Brazil led to higher coffee prices, while heavy rains and crop diseases in West Africa caused cocoa prices to spike. Moreover, dry spells affected livestock feed costs, pushing up prices for beef and dairy products in the UK.

The frequency of extreme weather events is a growing concern, particularly as climate change perpetuates unpredictable global weather patterns. This underscores the intersection of climate issues with macroeconomic concerns that central banks must consider, as outlined in statements by Talbot (2026) and NGFS (2026).

Understanding the Link Between ENSO Phases and Food Prices

Further complicating the relationship between weather and food prices is the El Niño-Southern Oscillation (ENSO), a climatic phenomenon influencing global temperature and precipitation trends. The correlation between ENSO phases and UK food prices is evident: during El Niño events, food commodity prices often rise, suggesting that such weather episodes affect yields across major agricultural producers. A graphical representation from the IMF provides insights into this interdependence, reflecting fluctuations in commodities and food prices amid ENSO activity.

Developing a Proxy for Global Weather Shocks

To quantify the impact of these weather shocks on UK food prices, the authors constructed a proxy using advanced statistical methods. The high-frequency proxy is based on unanticipated weather events, integrating data from European Commission warnings concerning crop conditions. These warnings are derived from anomalies in rainfall and vegetation and allow researchers to assemble a historic series of weather disruptions relevant to agricultural output.

The model also incorporates a Bayesian vector autoregression (BVAR) approach, refining estimates of how these shocks translate into price changes in the UK. This method enables identification of structural shocks that separate weather influences from energy supply disruptions. As highlighted, significant energy supply shocks, such as the European energy crisis of 2022–2023, coincided with adverse weather conditions, impacting food production costs and consumer prices.

Estimating the Impact of Weather Shocks on Inflation

By analyzing the relationship between global weather disruptions and UK inflation, preliminary findings indicate that a 1% increase in global food commodity prices—triggered by weather events—would result in a 0.15 percentage point increase in UK food inflation, persisting for approximately 2.5 years. This data reflects a lagged response to the original weather shocks, generally consistent with findings from related studies, which identify a moderate yet significant inflationary impact following agricultural disruptions.

Quantifying Historical Contributions of Weather Events to Food Inflation

The historical analysis revealed that global weather events have made measurable contributions to food inflation in the UK, notably peaking by 0.8 percentage points in May 2025, coinciding with a food inflation rate of 4.4%. Noteworthy historical peaks show that weather shocks contributed significantly in 2017, coinciding with a strong El Niño event, reflecting broader systemic impacts over time.

Chart data also illustrates that while current events might not fully encapsulate recent policy shifts or climate events, there remains a visible trend linking global weather phenomena to consumer food prices, supported by economic theory and empirical observations.

Conclusion

This analysis underscores how increasingly frequent global weather shocks play a significant role in shaping UK food inflation trends. The constructed model, harnessing near real-time data, provides a robust framework for understanding the lagged effects of weather shocks on food prices while offering a valuable tool for policymakers aiming to navigate the complexities introduced by climate impacts.

As global agricultural conditions remain unpredictable, understanding the economic ramifications of such weather events will be increasingly vital. Insights gained from this study can inform monetary policy considerations, particularly in contexts where inflationary pressure is already a significant concern.

Authors' Contact: India Rimmer works in the Bank’s International Surveillance Division, while Hannah Copeland and Boromeus Wanengkirtyo are part of the Bank’s Structural Economics Division. For further inquiries, please contact [email protected].