Living Better with Climate Inflation

It's part of facing the new reality

Photo by Sean Robertson on Unsplash

Living abundantly with climate change means living abundantly with inflation. The two are tied together. In this article, I want to show you how they are tied together and discuss strategies for living abundantly anyway.

Recently, there was a headline from CNBC: Your daily cup of coffee could get more expensive because of climate change. The reality is that they are understating it. Your daily coffee will get more expensive because of climate change, as are so many food products.

Here’s the details on coffee: The price of raw arabica beans spiked 70% in 2024. Why? Because of unprecedented drought in Brazil, the largest coffee exporter in the world. Shortages like these cause a very different kind of price inflation for consumers. It is driven by the law of supply and demand. Any time you have more demand than supply, prices go up.

What we normally call “inflation,” however, is usually driven by too much money chasing a stable supply. Demand is elastic. It changes. The availability of money creates increasing demand. You can have more or less demand, and it can be affected by economic conditions. Changes in interest rates can alter the money supply and therefore demand, and that is why increasing rates usually reduces inflation. With climate change and food crops like coffee, we have the opposite problem: Stable demand—people need their coffee—meeting a dropping supply. Interest rates cannot change supply, especially when the drop in supply is created by climate change. The agricultural crops that provide our foods are particularly susceptible to climate events.

In any given year, a particular commodity may be affected differently from the previous year. This year it is coffee. In recent years it’s been eggs and olive oil. It’s also been rice embargoes. Wineries in France are tearing up their vineyards due to drought, and storms in Spain just flooded out their orange crop. In a global agricultural world, all of these realities affect supply, no matter where they occur. Prices go up. They may come down. But what is new is that every year has a set of commodities whose prices are blowing out of proportion due to climate change events. If we are to live abundantly in this changing world, we are going to have to take this fact into account.

A Few Ideas for Planning for Rising Food Prices

Below I share a few ideas for ways to approach inflation that is at a higher level than we are used to, and a level that is not likely to go down very much. Some of these ideas require special circumstances in your life, while others do not. If readers have additional strategies, I’d love to hear them.

Except for the recent bout of inflation in 2022 that took overall inflation to 9% in the US, most Americans have little experience living through inflation. We’ve been able to live and plan for very modest price increases over long periods of time as the combination of Fed policy and productivity gains in the economy, driven mostly by technology, were able to keep prices stable—especially for food and other essentials. The pandemic-driven shortages that drove prices up in 2022 were exacerbated by climate events which mostly received little attention as to their contribution to the cause of inflation. Today, the effects of climate-driven inflation won’t be hidden quite as much, unless tariffs and immigration policy in the US override it. Those forces could just make climate inflation worse.

Budgeting

The wise consumer is well-advised to prepare and budget differently. One’s financial plans should consider, especially, a larger increase in the food budget year over year. Rather than reacting to this as if it is unexpected, I am figuring that for the next 5-10 years, a 5% annual increase in overall food prices is more reasonable than using, for example, the Fed’s target inflation rate of 2%. This enables me to plan for where that additional 5% per year will come from. This is especially important is you don’t have increases in income to cover the gap. In that case, one must adjust the overall budget allocation.

Garden to Grow Your Own

Many people recommend supplementing the grocery budget with growing your own food. If your situation is right, this is a good idea. The conditions for success include the space to grow (even if it is a community garden), the time to tend, harvest, process, and cook, and the ability to make small reasonable investments in the growing. I have those conditions and my garden is a perfect complement to my kitchen. While I take great joy in gardening and cooking, this can be a slippery slope. If you are not careful, the garden that was supposed to save money can quickly become a financial sink hole involving expensive seeds or plants, overpriced tools, and new equipment that is supposed to make it easier when you run up against time limitations. Time can be a key challenge, particularly if you have a full time job or have to deal with a garden that is remote to your residence. With such limitations, you won’t replace all your groceries, but you might be able to cover more than that 5% annual increase discussed above.

For most people, garden growing also offsets rising prices in other areas of the food budget. So far as I am aware, no one in the US can grow coffee outside of Hawaii. Precious few grow olives for olive oil. Many areas grow grapes and make wine, but if you want to start any of these, there is a large investment in plants/ trees/vines, protecting plants, and processing the harvest. That’s impractical for most people. Instead of replacing these items by growing them, you can grow cheaper (and better) beans and potatoes to help manage the overall cost of food.

Dietary Choices

A third approach is to address these rising costs as an opportunity to reconsider dietary choices. If retail coffee prices go through a substantial price increase, it may be time to consider having one good coffee, not two. I myself have recently changed my wine habits because the prices got so high it drove my budget out of control. I switched from nightly wine to 1-2 nights per week, and replaced the wine with a cranberry juice and soda mix on the nights I skipped the wine. Low and behold, I started sleeping better, napping less, and living with better energy throughout my life. I also found that I saved hundreds of dollars per month—a happy surprise! I always enjoyed wine, but the recent inflation drove me to re-assess, and the result has been a huge benefit in my life.

A similar phenomenon has affected my choice of meats. I love beef, but I don’t have land to grow my own. At retail prices of $10-40/lb., beef is just too expensive. So I slowly switched to chicken and pork. Then, I switched to lower quantities—one chicken thigh instead of two in my stir fry, for example. Or a quarter pound of salmon instead of a half pound. I still get all the protein I need but at a much reduced cost. This has also pushed me to be more creative with my cooking than, say, throwing a steak on the grill and calling it good. I’ve enjoyed the new creativity.

Process Your Own

Finally, there is making your own food from raw ingredients. This can span from yogurt to sauerkraut to maple syrup. It can include making your own wine or beer. Bread baking can fall into this category, too. As with gardening, one must be careful not to overspend on equipment, and you may need to plan for mistakes if you haven’t done it before. I make my own maple syrup and my own yogurt, baked my own bread and made my own pasta. Usually, you’ll save money doing these things, and you might even find enjoyment.

Conclusion

Climate inflation is here to stay. We can bemoan inflation all we want, but when it is driven by shortages of supply, you really can’t stop it. The forces are environmental, not solely economic. Demand won’t change because people need to eat. Better to make plans to cope, for as the old saying goes, hoping it goes away is not a strategy.

Anthony Signorelli

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