The global cost of living crisis is having an impact on people all over the world. Rising food and energy costs are making it increasingly difficult for people to buy essentials. The United Nations Development Programme has estimated that 71 million people are at risk of falling into poverty as a result of the crisis. Reuters has been talking to people in different countries to find out what the human impact of the crisis is and what governments around the world are doing to help.
Unpredictable weather events
Unpredictable weather events are putting the region’s resilience to the test. In Asia alone, severe weather has resulted in the shutdown of industries and upended the lives of ordinary citizens. Across the region, countries have experienced a range of severe weather conditions, including floods, droughts, landslides, and fires.
Unpredictable weather events are affecting a wide range of sectors, and the costs of extreme weather are increasing due to climate change. The NOAA calculates the direct costs of extreme weather events, including physical damage to buildings and the material assets within them. It also includes losses from business interruption and wildfire suppression. This does not account for the human lives lost in natural disasters. As climate change continues to worsen, extreme weather events are likely to become more frequent and severe. Furthermore, coastal storms are likely to be more damaging because of sea level rise. Extreme weather events also affect people who live in low and moderate-income areas. They have less financial resources to prepare for or recover from extreme events, and they are more likely to be hit by severe weather.
Rising food and energy prices
Despite the high prices, not all people are suffering. Some countries have become more affluent, enabling them to afford higher prices. Others, such as low-income countries, are struggling to make ends meet. The FAO is doing its part to address this crisis by providing support and information to those affected by high prices. The FAO has compiled a database of price changes in several countries to assess the effects on households and to identify the best ways to address the issue.
The cost of living crisis has been made worse by the combination of rising food and energy prices and the loss of access to financial resources. One of the reasons for the rising prices is crony capitalism, a form of capitalism where governments support the interests of capitalists and allow them to reap huge profits. It is this system that has contributed to the triple crisis in food, energy, and finance.
Currently, food and energy prices are rising in many countries, including the US. While food prices are increasing due to the COVID 19 pandemic, the cost of living crisis is also being affected by the war in Ukraine, which has disrupted supply chains. As a result, the cost of natural gas has risen by 166.8% since February, while corn and sunflower seed oil prices have gone up by between 60 and 75 percent.
Government measures to combat inflation
The cost of living crisis has forced governments to adopt measures to combat rising prices, such as raising interest rates. However, these measures should be the last resort and only if there is clear evidence of broad-based inflation, driven by unusually high levels of demand. In the meantime, policymakers should consider a range of short-term measures as well as longer-term structural changes.
High food and fuel prices in 2008 caused global inflation to soar. Many countries let the high global prices pass through to their own economies. However, some governments made sure that the costs did not rise too much and prevented shortages. This administrative price-setting generally comes with a large subsidy bill.
A recent survey found that 43% of UK adults believed they would not be able to save money in the next 12 months. The Office for Budget Responsibility has forecast a fall of 2.2% in 2022/23, which would be the biggest fall since the financial year 1956/57. The cost of living crisis is making it harder for the British public to afford basic necessities.
Action taken by governments to combat fuel poverty
The cost of living is increasing rapidly, and if governments fail to act now, the consequences could be severe. In particular, rising fuel bills will force families to choose between food and heating, and will increase the number of deaths each year linked to cold homes. These deaths can also put strain on the NHS and social care services.
It is estimated that by January 2023, two-thirds of households in the UK will be in fuel poverty – that is, households spending more than 10% of their income on heating and electricity. The levels of fuel poverty vary considerably from region to region, with London experiencing the highest levels. Large families and lone parents are particularly at risk of living in fuel poverty, with many spending more than half of their income on fuel.
Governments are taking action to reduce the number of people experiencing fuel poverty. The Scottish Government’s flagship fuel poverty programme, Warmer Homes Scotland, will be able to support more people, including people over the age of 75. Funding for the scheme will increase to PS160 million, which will help tackle fuel poverty and reduce carbon emissions.