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Heatwaves and droughts across Europe have affected the production and quality of cereals, lifting prices of milling wheat to four-year highs. Summer months typically see higher grain prices, but climate events seem responsible for this year's above-average spikes.

Harvests  in Germany, Europe's second largest wheat producer and seventh biggest globally, are forecast to be the lowest in 15 years – down 25 per cent on last year. An unusual combination of heavy rains and heatwaves this year has lowered grain quality in Russia, the third biggest producer globally, and Ukraine, the ninth.

Agriculture is both perpetrator and victim of climate change, but of the cereals we've analysed, wheat is the commodity most vulnerable to changes in climate.

There have been previous spikes. Severe droughts and heatwaves in Russia and Ukraine in 2010-11 pushed wheat prices 39 per cent above the previous five-year average. Those countries restricted exports, helping produce a knock-on effect on the prices of soybean, maize and barley, and on broader food indices.

Recent soybean and maize price echo those rises, and while last year's good harvest has left stockpiles above average levels, periods of volatility increase the risks to food security and supply chains.

Half of the UK's food supply is imported; 30 per cent from the European Union. Parched fields and withering of crop yields across Europe have put pressure on wholesale prices of a range of produce, including lettuce, onions, broccoli and potatoes.

However, despite sustained hot, dry weather, with near-record breaking temperatures that have disrupted UK food production and pushed up wholesale prices, the impact on retail inflation should be small.

Europe also had a heatwave in 2003 that followed a harsh winter that caused major damage to agricultural production, but there was no clear food price surge. And while wheat prices have risen this year, prices on a broader basket of global agricultural goods have been relatively steady.

Higher UK wholesale costs can be absorbed through the supply chain, which also includes wage and transport costs. Margins can be compressed, with fierce competition preventing higher costs translating into increased prices. Or stores may sell, say, wonkier carrots or leave shelves empty.

Food has only a 9 per cent weight in the consumer price index. We estimate that even if UK food producers' input prices rose 10 per cent over two months, food retail prices would increase by 4 per cent but consumer price inflation would peak at just 0.4 percentage points – and drop out of the calculation after a year.

However, as climate impacts accumulate and weather patterns become less predictable, we expect continued agro-commodity price rises and/or volatility. Countries will need to build resilience in their agricultural systems, embracing technology, improved water infrastructure, and new farming methods.

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