Europe is baking, and it’s not just uncomfortable. It’s expensive. Record-breaking heat waves that began sweeping across the continent in late May 2026 have sent energy demand surging, power prices spiking, and inflation expectations climbing at exactly the wrong time for a central bank that just hiked rates for the first time in years.
Nomura has flagged the environmental crisis as a potential inflation accelerant, warning that higher energy costs tied to extreme weather could keep price pressures elevated well into 2027 and 2028. For crypto markets, which have spent the past year dancing to the tune of central bank policy, this is a development worth watching closely.
The heat is on, literally
The numbers paint a stark picture. Belgian power prices spiked above €1/kWh during the worst of the heat wave. On a single day at the end of May, day-ahead electricity prices in Belgium surged 29%.
Belgium wasn’t alone. Spain, Italy, the UK, Germany, and France all felt the impact as temperatures shattered records across the region.
