Rising Inflation Pushes 71 Million People Worldwide Into Poverty

hunger africa

The worldwide cost-of-living crisis is pushing an additional 71 million people in the world’s poorest countries into extreme poverty, warned the a new report by the U.N. Development Programme (UNDP) on Thursday

The report said:

“The war in Ukraine has severely disrupted global markets for food and energy due to both countries’ large global market shares. Before the war, Russia was the world’s largest and second biggest exporter of natural gas and crude oil, respectively, while Russia and Ukraine together accounted for almost a quarter of global wheat exports, 14 percent of corn exports, and more than half of sunflower oil exports. A consequence of global market disruptions has been a further increase in energy and food prices —  already on an upward trend after the first year of the pandemic and mainly driven by a recovering global demand with supply restrictions. More than two thirds of the 166.8 percent increase in natural gas over the twelve-month period ending on 31 May 2022 has been recorded since the start of the war on 24 February 2022. In the case of crude oil and its two main refined products, i.e., gasoline and heating oil, the post-invasion subperiod accounts for between half and 60 percent of the annual price increases and is also responsible for almost 40 percent of the annual price increase of wheat and for 60 to 75 percent of the annual price increases of corn and sunflower seed oil.”

Achim Steiner, UNDP administrator, said an analysis of 159 developing countries showed that the surge in key commodity prices this year was already slamming parts of Sub-Saharan Africa, the Balkans, Asia and elsewhere.

The UNDP called for tailored action. It was seeking direct cash handouts to the most vulnerable and wanted richer nations to extend and widen out the Debt Service Suspension Initiative (DSSI) they set up to help poor countries during the COVID-19 pandemic.

“This cost-of-living crisis is tipping millions of people into poverty and even starvation at breathtaking speed,” Steiner said. “With that, the threat of increased social unrest grows by the day.”

Institutions like the UN, World Bank and International Monetary Fund have a number of ‘poverty lines’ – one for the poorest countries where people live on $1.90 or less a day. A $3.20-a-day line for lower middle-income economies and a $5.50-a-day line in upper middle-income countries.

“We project that the current cost-of-living crisis may have pushed over 51 million more people into extreme poverty at $1.90 a day, and an additional 20 million at $3.20 a day,” the report said, estimating it would push the total globally to just over 1.7 billion people.

It added that targeted cash transfers by governments would be more “equitable and cost-effective” than blanket subsidies on things like energy and food prices that richer parts of society tend to benefit more from.

“In the longer term they drive inequality, further exacerbate the climate crisis, and do not soften the immediate blow,” the UNDP’s Head of Strategic Policy Engagement, George Gray Molina, said.

The last two years of the pandemic have also shown that these cash-strapped countries would need support from the global community to fund these schemes.

They could do so, Molina said, by extending the G20-led Debt Service Suspension Initiative (DSSI) by two more year and expand it to at least 85 countries from a currently-eligible 73.

In low-income countries, families spend 42% of their household incomes on food but as Western nations moved to sanction Russia, the price fuel and staple food items like wheat, sugar and cooking oil soared. Ukraine’s blocked ports and its inability to export grains to low-income countries further drove up prices, pushing tens of millions quickly into poverty.

The speed at which this many people experienced poverty outpaced the economic pain felt at the peak of the pandemic. The UNDP noted that 125 million people experienced poverty over about 18 months during the pandemic’s lockdowns and closures, compared with more than 71 million in just three months after Russia’s invasion of Ukraine in late February.

Some of the countries hardest hit by inflation include Haiti, Argentina, Egypt, Iraq, Turkey, the Philippines, Rwanda, Sudan, Kenya, Sri Lanka and Uzbekistan. In countries like Afghanistan, Ethiopia, Mali, Nigeria and Yemen, the impacts of inflation are even harder for those already at the lowest poverty line.

The total number of people living in poverty, or are vulnerable to poverty, stands at over 5 billion, or just under 70% of the world’s population.

Another U.N. report released Wednesday said world hunger rose last year with 2.3 billion people facing moderate or severe difficulty obtaining enough to eat — and that was before the war in Ukraine.

There is a need for the global economy to step up, Steiner said, adding that there is enough wealth in the world to manage the crisis, “but our ability to act in unison and rapidly is a constraint”.

The UNDP recommends that rather than spending billions on blanket energy subsidies, governments instead target expenditure to reach the most impacted people through targeted cash transfers that can prevent a further 52.6 million people from falling into poverty at $5.50 a day.

For cash-strapped and debt-laden developing countries to achieve this, the UNDP called for an extension of debt payments that had been in place during the pandemic among the world’s richest nations.

Germans Struggling To Make Ends Meet

People in the German capital have complained about rising inflation and incompetent ministers

Germans, particularly retirees, are bearing the brunt of inflation, with some even having to cut back on food, according to interviews with Berliners on a Telegram channel.

Some in the German capital expressed strong criticism of the way Olaf Scholz’s cabinet is handling the situation and the extent to which the country is engaged in the Ukraine conflict.

According to the German government, year-on-year inflation was at 7.8% in May, with energy prices undergoing the sharpest increase since February.

The German media, citing experts, warned in May that food prices were likely to grow even higher in the coming months. The ‘Kanzlerdaddy’ Telegram channel took to the streets of Berlin to gauge public opinion.

One man complained that the German government was not “doing much for people here”, adding that while his own quality of life had not yet suffered, he is still dissatisfied with the leadership in Berlin. He leveled particularly harsh criticism at Economy Minister and Vice Chancellor Robert Habeck, whom he accused of disrupting gas and oil deliveries from Russia as well as shutting down nuclear power plants in Germany, and attempting to replace them with less-efficient wind turbines.

He also mentioned the government’s support of Ukraine adding that Germany had nothing to gain from its involvement.

“It has gotten bad, frankly speaking,” another woman told the interviewer.

The hardest-hit group, according to her, is retirees.

The woman gave the example of an elderly neighbor in her apartment block, where residents are chipping in to help her buy food.

UK Workers Have Lost £9,200 A Year In Wages Since 2008

Another report said:

Lack of pay increases is driving the country’s living standards slump with the average UK worker losing £9,200 per year since the financial crisis of 2008.

With salaries stagnating and inflation running rampant, UK households are squeezed, particularly those who pay rent and those with young children, according to the Resolution Foundation.

Household disposable income growth for working age families has plunged to just 0.7% a year in the 15 years leading up to the Covid pandemic.

The Foundation’s 14th annual Living Standards Audit said “too many families today” have to cope with low disposable incomes and little or no private savings. Over one in four have less than a month’s worth of financial buffer.

The figures also show a slump in living standards across the UK. Between 1961 and 2004-05, typical household incomes for non-pensioners grew by 2.3% per year, on average, or 25% per decade.

Between 2004-05 and 2019-20 however, typical income growth slowed to just 0.7% cent per year.

The incomes of the poorest fifth of the population were no higher on the eve of the pandemic than they were back in 2004-05, despite GDP per person growing by 12% over this period.

Pay is the main driver behind the UK’s living standards slump. “Typical wages are no higher today than they were before the financial crisis, representing a wage loss of £9,200 per year, compared to a world in which pay growth had continued its pre-financial crisis trend,” the report said.

“Households across Britain — and across many other countries — are currently grappling with high levels of inflation that we haven’t seen for generations,” Adam Corlett, principal economist at the Resolution Foundation, said.

“But while many of the causes of the current crisis are global in nature, it is Britain’s recent history of low income growth and high inequality that has left so many households really struggling to cope.”

On the eve of the pandemic, the typical household income of families in social and private rented accommodation was 37% and 24% below overall typical income respectively.

The incomes of single parents were 35% lower, while the household incomes of children under the age of five were 20% lower.

“Britain’s poor recent record on living standards — notably the complete collapse of income growth for poor households over the past 20 years — must be turned around in the decade ahead.

“To do that, we must address our failure to raise pay and productivity levels, strengthen our social safety net, reduce housing costs and build on what we’ve done well — such as boosting employment for lower-income households,” Corlett added.


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