Three in four UK adults worried about impact of ‘climateflation’ on bills

13/02/2024

Three-quarters of UK adults are concerned about the impact that climate change will have on their bills, according to polling commissioned by Positive Money. After surveying 2,000 adults last month, the researchers found that 75% were worried about the cost of heating or cooling their home, while 69% were concerned about the impact on grocery prices. Furthermore, 54% of respondents expressed concern about the effect climate change would have on the price of housing or rent, with 74% concerned about electricity costs, 68% worried about the cost of water, and 59% fearful of transport costs. In a new report, Positive Money explains how environmental breakdown is leading to higher prices – or ‘climateflation’ – at the same time that volatile fossil fuel prices drive inflation across the economy – or ‘fossiflation’. The authors also outline how the impacts are felt disproportionately by low-income households and countries. “By taking action to green the economy, policymakers actually stand a chance of pre-empting inflationary shocks and responding in ways that both shield households from soaring bills and avoid exacerbating the problem of an economy dependent on fossil fuels,” commented Jordi Schröder Bosch, researcher at Positive Money EU and co-author of the report. Policymakers should rely less on tools like interest rates to manage inflation, according to the report, because they “jeopardise financial stability” and exacerbate the problem by increasing the cost of the very green projects that will bring prices down. Instead, central banks should factor environmental considerations into their policymaking, coordinate more with the Treasury and industrial authorities, and abandon interest rate rises as a blanket response to inflation. The researchers claim that this would have widespread support from the public, with 55% of those polled saying they would support a policy that makes it cheaper to invest in green projects such as renewable energy, rather than fossil fuels. Dual interest rates – where a favourable rate is offered to investors in green projects – are one way the report suggests central banks could factor environmental considerations into their policymaking. “Reacting to inflation driven by global supply-side factors with policies that hinder the cost-saving investments we need is not just futile, but actively harmful to household bills,” Bosch continued. “Central banks must take more seriously the role fossil fuels have in driving inflation, both in terms of higher energy costs, but also higher prices for food and other goods as climate breakdown increasingly wreaks havoc on crop yields and supply chains.” Image credit: Shutterstock