The silent storm: How climate, food commodity prices, and political stability fuel Somalia’s inflation crisis

In fragile economies, inflation is a critical macroeconomic issue for household well-being in vulnerable nations. As prices increase, at-risk families are forced to diminish essential consumption, remove children from formal education, and forsake long-term developmental goals to satisfy immediate survival requirements. In this regard, this study examines the impact of climate change, food commodity prices, and political stability on inflation in Somalia. Unlike previous studies, this study employs a novel Kernel regularized least squares (KRLS) machine learning method, time-varying Granger causality, and an innovative supremum right-tail Augmented Dickey-Fuller test to examine explosive tendencies in data series. The results of the explosive-behavior analysis identify one period of statistically explosive dynamics in the consumer price index (2006–2022), food commodity prices (2010–2014), and sugar commodity prices (2010–2012). In addition, the time-varying Granger causality between the sampled variables is observed. The empirical results of the KRLS method indicated that food commodity prices and average temperature have a positive and increasing marginal effect on inflation, whereas average rainfall and political stability reduce it with a decreasing marginal effect. These results are also robust for various econometric methods and disaggregate food commodity prices, including sugar, oil, and meat commodities. The study findings highlight the importance of implementing a composite strategy that enhances climate resilience, stabilizes food systems, and improves political governance as a possible solution to fighting inflation in fragile economies such as Somalia.