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Insight of the Day: Why the price of chocolate exploded: How climate change drives inflation

The soaring prices of chocolate can be attributed to climate change, which has significantly affected cocoa bean production, particularly in West Africa, where most of the world's cocoa comes from. Climate change has led to increasingly erratic and extreme weather patterns, such as heatwaves and shifting rainfall, which have harmed cocoa tree growth and made harvests unpredictable. The 2023-2024 season is expected to yield significantly less cocoa than usual due to these factors.

While chocolate may be considered a luxury, it's a globally traded commodity, and disruptions in its production have ripple effects on prices. Climate change is not only affecting chocolate but is also contributing to rising prices for various products worldwide. Studies have shown a consistent increase in food prices in response to higher temperatures, with projections suggesting further inflationary impacts in the future.

Researchers warn that unmitigated climate change could lead to even larger inflation impacts in the coming years. While adaptation measures theoretically could help, there's limited evidence of their effectiveness historically. Additionally, traditional growth-focused policies may not be sufficient to mitigate the inflationary impacts of climate change, suggesting a need for alternative approaches like degrowth.

Until governments and policymakers address the inflationary effects of climate change, consumers can expect continued price rises across various goods, including chocolate. This underscores the urgency of tackling climate change to ensure stable supply chains and affordable prices for consumers globally.

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