The cost-of-living crisis has pushed 71 million people into poverty – here’s what needs to happen

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Mark McCord, Writer, Formative Content, Annabel Walker, Writer, Formative Content

• The cost of living crisis has pushed 71 million people into poverty, according to the United Nations.
• Inflation is climbing as the Ukraine conflict and the effects of the pandemic put pressure on supplies of food, energy and other essentials.
• The UN says governments and banks must urgently take action.
• Debt relief, handouts and subsidies are seen as the best means of addressing the immediate impacts on the world’s poorest.

The United Nations says the global cost of living crisis is pushing 71 million people into poverty. And a global effort is now needed to help shield the poorest from the impact of rapidly rising prices.

The UN has called for a moratorium on debt repayments so that governments can subsidize food and energy for their people. And it urged leaders to protect supply lines to ensure necessities get to the millions of people stricken by the cost of living crisis.

The call came after a report by the UN’s Development Programme (UNDP) noted an alarming recent surge in poverty during the current bout of price rises.

It said global humanitarian and development assistance was needed.

“New international efforts can take the wind out of this vicious economic cycle, saving lives and livelihoods,” said UN Development Programme (UNDP) Administrator Achim Steiner.

The cost of living crisis has pushed 71 million people into poverty, according to the United Nations. Image: UNDP

How goods and services have been affected

The current crisis has been caused by supply chain disruptions that resulted from the pandemic, combined with shortages in grain and energy sparked by the conflict in Ukraine. That’s raised the cost of everything from bread and meat to transport and heating.

Solving the problem is being made trickier by the climate crisis, which is reducing the ability for many to grow crops or make products that can bring in badly needed money and food.

The UNDP report showed that natural gas prices had risen almost 170% by the end of May, the price of wheat climbed 64%, while that of sunflower seed oil for cooking jumped 42%. Urea, which is needed to fertilize crops, has seen a 179% surge. For most products, between a half and two-thirds of those price increases have been registered since Russian troops entered Ukraine in late February.

Total percentage price of commodities over 12 months up to May 2022. Image: UNDP

Poorest worst affected by the cost of living crisis

Inflation affects everyone. But a study by the World Economic Forum found that the global cost of living crisis was making life substantially harder for a quarter of people in the developed world.

Its effects are naturally felt most among those with least money to begin with. The UNDP report found that 71 million people in 159 developing economies had been added to the growing global pool of poverty in the three months through June.

For 2022, the International Monetary Fund has predicted developed-world inflation will be 6%, but that of the developing world will be 9%.

“We are witnessing an alarming growing divergence in the global economy as entire developing countries face the threat of being left behind as they struggle to contend with the continuing COVID-19 pandemic, crushing debt levels and now an accelerating food and energy crisis,” Steiner said.

How governments can help

Inflation can take years to reverse. In the meantime, the UN has called on governments and lenders such as banks to help. Among the measures they can take are debt relief programmes – which would see them forgive or delay some credit repayments to give governments of worst-affected countries money to protect their poor.

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What is the World Economic Forum doing to help ensure global food security?

Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.

New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.

Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.

With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.

Learn more about Innovation with a Purpose’s impact and contact us to see how you can get involved.

That could help them pay for energy subsidies or offer cash payments so that families can buy food. Other cash transfers, such as tax rebates, should also be considered, said the UN.

“We find that targeted and time-bound cash transfers are the most effective policy tool to address the impacts,” the report stated.