Climate change contributing to global inflation

Climate change contributing to global inflation. OSLO: The head of Norway`s mammoth sovereign wealth fund said on Wednesday it would be `quite difficult` to bring down global inflation due to persistent upward pressure brought on by climate change and global market trends.

But a positive development in the world is artificial intelligence, which will enable us to concentrate on the `most fun` tasks, Nicolai Tangen, the chief executive of Norges Bank Investment Management which manages the fund, said as he addressed current economic trends while presenting the fund`s halfyearly report.

Central banks around the world have struggled to rein in inflation despite numerous interest rate hikes since the end of the Covid pandemic.

`We think it could be quite difficult to bring down global inflation, Tangen said.Manufacturing costs have been rising amid a global push for `nearshoring`, where goods are produced closer to their consumers, Tangen said.

In addition to that trend, `the new thing here is the climate effects, that is to say, the link between the climate and inflation,` he said, pointing to rising food costs.

`More expensive olive oil, potatoes, beef, all these things and that fuels inflation,` he said.

`What`s new is that (the climate) is also affecting productivity.` Tangen cited a summer `in Europe this year so hot that you can`t work in the middle of the day`, as well as increasingly extreme weather events that dissuade tourists.

`And then there`s nothing going on in the stores… We shut down parts of society during certain periods due to the climate,` he said.-AFP