The cost-of-living crisis is having a global impact. Here’s what countries are doing to help
Here are some of the human impacts of the cost of living crisis - and what countries are doing to help. Image: Unsplash/Alexander Mils
Listen to the article
This article was first published in July 2022 and updated in September 2022.
- The soaring cost of food and energy is affecting people across the globe.
- An additional 71 million people could be pushed into poverty, according to the United Nations Development Programme.
- Reuters has been speaking to people in different countries in its series of Inflation Diaries.
- Here are some of the human impacts of the cost of living crisis - and what countries are doing to help.
The economic impacts of the Russian invasion of Ukraine are rippling out across the globe in a cost of living crisis that’s pushing millions more people into poverty.
Soaring food and energy prices have resulted in 71 million people in developing countries falling into poverty, according to the UN Development Programme (UNDP).
“Unprecedented price surges mean that for many people across the world, the food that they could afford yesterday is no longer attainable today,” says UNDP Administrator, Achim Steiner.
While supply-chain disruptions from the COVID-19 pandemic had already pushed up prices, inflation is rising due to further disruptions caused by the war in Ukraine.
Most of the 166.8% cost increase in natural gas over the 12 months to May 2022 has been recorded since the war began in February. Russia’s war in Ukraine is also responsible for almost 40% of the annual price increase of wheat and for 60-75% of the annual price increases of corn and sunflower seed oil, according to UNDP.
Worldwide impact of the cost of living crisis
The countries facing the worst effects of the crisis across all poverty lines, according to UNDP, are Armenia and Uzbekistan in Central Asia; Burkina Faso, Ghana, Kenya, Rwanda, and Sudan in sub-Saharan Africa; Haiti in Latin America; and Pakistan and Sri Lanka in South Asia.
But even in the most developed countries, people are going without food. In May, an Ipsos poll for the World Economic Forum found that 1 in 4 people were struggling financially in 11 developed countries. In the UK, as many as 1 in 7 adults now say they can’t afford to eat every day - an increase of 57% since January.
The poorest families are the most affected by price rises because food and energy bills make up a bigger proportion of their monthly outgoings - in some cases, twice as much.
Reuters has been reporting on the impacts of the cost of living crisis in 18 countries around the globe in its three-part 'Inflation Diaries' series. Here are some of the ways inflation is affecting people’s daily lives:
- In Kenya, inflation is running at a five-year high of nearly 8%. Single mother-of-three Florence Kageha, 44, who sells vegetables, has had to start cooking with firewood or charcoal instead of kerosene. The family are walking everywhere, rather than taking motorcycle taxis, and they eat meat once a month. "The price of vegetables at the wholesale market has doubled, so I have to sell at double the price, but the customers can't afford it and I end up making a loss," she told Reuters.
- In the UK, where inflation has climbed to its highest rate in 40 years, from 1.6% to 9.1% in 18 months, 62-year-old Lenny Poynton, from south-east London, has been out of work since losing his job in removals in early 2021. He’s living on state welfare of around $300 a month and has been fasting regularly so he has enough money to buy food for his dog. "It's an uphill struggle to make ends meet," he told Reuters.
- In Bangladesh, graduate Abdus Salam is one of 3.6 million unemployed people who are struggling to find work as inflation hits an eight-year high. He is living on $32 a month, so has swapped his morning breakfast of boiled eggs for chickpeas and a few nuts. He said: "I always think positive. I'm a fighter."
- In Turkey, annual inflation is at a 24-year high of nearly 80% - but some experts say the true figure is more than double this official statistic. A March survey of residents in Istanbul found almost half could not afford red meat and a third could not buy vegetable oil. Pelin Miskioglu, who serves traditional Turkish breakfast to tourists at her cafe in the riviera town of Kas, said her regulars can no longer afford a beach holiday: "I don't think we will be able to survive this."
- In Australia, where inflation is at its highest rate in more than 20 years, single parent Genevieve fears she and her son will be homeless after she was evicted from her Melbourne home. The rising cost of food has made preparing special meals for her son, who has multiple allergies, more difficult. She often skips meals to ensure he has enough to eat. "I just go without. I don't have any luxuries, I don't buy new clothes, I don't get my hair cut."
- Venezuela has left a four-year period of hyperinflation, which is when monthly inflation rises above 50%. In 2018, inflation reached 65,000%, according to the BTI Transformation Index. Many Venezuelans have picked up extra jobs - or left the country in order to work and send money home from abroad. Retired schoolteacher Maria Teresa Clemente, 64, who lives in Caracas, took up side jobs such as sewing and hairdressing to pay her bills. "Most Venezuelans can't afford a funeral to bury a family member. What we do today is ask for donations from our communities to help pay for funerals," she said.
What are countries doing to ease the cost of living?
Governments are bringing in measures designed to ease the impact of inflation, including tax cuts, free train travel, energy subsidies and cash transfers.
However, the UNDP report warns that not all policies will be equally effective and some may disproportionately benefit wealthier people.
“While blanket energy subsidies may help in the short term, in the longer term they drive inequality, further exacerbate the climate crisis, and do not soften the immediate blow of the cost of lliving increase as much as targeted cash transfers do,” says report author George Gray Molina, UNDP Head of Strategic Policy Engagement. “They offer some relief as an immediate band-aid, but risk causing worse injury over time.”
Here are a few ways countries are supporting people:
- In Spain, train travel over distances up to 300km will be free for the three months from September to December, for those buying a multi-trip ticket.
- In Kenya, President Uhuru Kenyatta, who is stepping down after two terms in August, has increased the monthly minimum wage by 12%. The government is helping farmers pay for fertilizers and is providing fuel subsidies.
- Germany has taken a similar approach, where the federal government introduced a $9 monthly public transport pass until August.
- The government in India has restricted wheat and sugar exports and announced tax cuts to fuel and essential goods to help insulate consumers.
- In Scotland, First Minister Nicola Sturgeon has set out plans to freeze rents to help people cope with the rising costs of energy and food.
- The UK is giving 8 million low-income households a direct payment of $780 split into two instalments, while every household will get a $480 energy grant.
- Bangladesh is introducing family ration cards to ensure low-income households have essential goods.
How is the World Economic Forum improving the global financial system?
Don't miss any update on this topic
Create a free account and access your personalized content collection with our latest publications and analyses.
License and Republishing
World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.
The views expressed in this article are those of the author alone and not the World Economic Forum.
Stay up to date:
Retail, Consumer Goods and Lifestyle
Related topics:
Forum Stories newsletter
Bringing you weekly curated insights and analysis on the global issues that matter.
More on Economic GrowthSee all
Council on the Future of Growth and 2023-2024
December 20, 2024
