The impact of climate shocks on grain prices: a comparative analysis of European and Asian countries

Abstract

In the context of growing frequency of extreme climate shocks, assessing the impact of climate risks on economic indicators is becoming critically important. Agriculture is one of the most vulnerable sectors of the economy, as its efficiency directly depends on climatic conditions. Changes in temperature regimes, precipitation levels, and the frequency of extreme climate shocks can significantly reduce crop yields and alter the dynamics of food prices. Despite a considerable body of research on the relationship between climatic factors and agricultural production, the connectedness between physical climate risks and contribution of grain prices to inflation at a cross-country level, as well as regional differences in the sensitivity of food markets to climate shocks, remain insufficiently studied in the scientific literature. The aim of this research is to assess the impact of physical climate risks on changes in the growth rates of grain prices in European and Asian countries. Based on panel data covering a 19-year period for two samples (10 European and 15 Asian countries), the relationship between the Climate Risk Index (CRI), seasonal meteorological parameters (temperature, precipitation), and changes in the growth rates of grain prices was analyzed using the Arellano-Bond Generalized Method of Moments (GMM). The results revealed significant interregional differences. In Asian countries, the influence of the aggregated Climate Risk Index (CRI) on inflation was confirmed: a decrease in a country's vulnerability to disasters (an increase in CRI) leads to a statistically significant decrease in inflation, and vice versa. In Europe, changes in the growth rate of grain prices are more sensitive to specific meteorological anomalies, such as abnormally warm winters and precipitation levels in January. The conducted analysis emphasizes that the vulnerability of the agricultural sector to climate shocks and the mechanisms of their impact on price growth rates are regionally specific, determined by the structure of agriculture, the level of technological development, and the institutional environment.

To cite: Grebenshchikova A.V., Rudomanenko I.E. The impact of climate shocks on grain prices: a comparative analysis of European and Asian countries. Research in Economic and Financial Problems. 2026;2:5. (In Russ.) https://doi.org/10.31279/2782-6414-2026-2-5