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Household budgets everywhere are impacted by high food, transport and energy prices
by UN Global Crisis Response Group, agencies
10:06am 15th Jun, 2022
Aug. 2022
UN Global Crisis Response Group on Food, Energy and Finance. (Briefing 3: Extract)
The impacts of the ongoing cost-of-living crisis are being felt widely across the world. Commodity prices remain at a high levels causing difficulties in all regions. The high price volatility witnessed since the pandemic, particularly in 2022, suggests that prices remain at high levels and could rise yet again.
Due to high inflation, the situation has remained tight for billions of people, whose socioeconomic prospects have deteriorated as a result.
Inflation continued to accelerate worldwide in July 2022, breaking multidecade records in advanced economies, developing countries and the least developed countries in particular are experiencing even higher levels of inflation. Food and, especially, energy prices are a major component of recent inflation metrics in many economies.
Prices were already high at the beginning of January 2022, and increases have been broad based, affecting almost all food categories.
Since the beginning of 2020, the vegetable oil price index has more than doubled, that of cereals has increased by over 60 per cent and that of sugar by over 50 per cent.
In addition, as highlighted in GCRG Brief No. 2, if fertilizer shortages continue, the food access crisis in 2022 will be exacerbated by a food availability crisis in 2023.
The consequences of the crisis include worsening nutrition and health outcomes.
In 2020 alone, almost 3.1 billion people could not afford a healthy diet, up by 112 million compared with in 2019, due to the impact of the coronavirus disease (COVID-19) pandemic and related measures.
The cost-of-living crisis, and soaring food prices, make it even more challenging for increasing numbers of people to afford a minimally nutritious and healthy diet.
Before the outbreak of the war in Ukraine, the number of chronically undernourished people had already grown by about 150 million since 2019, with up to 828 million people in 2021 affected by chronic hunger (long-term or persistent inability to meet food consumption requirements).
There is also a significant and widening gender gap; in 2021, the gender gap in food insecurity was one percentage point higher than in 2020, with 31.9 per cent of women worldwide moderately or severely food insecure, compared with 27.6 per cent of men. Projections are that in 2022, the number of vulnerable women for whom WFP will provide essential prevention and treatment services has increased by almost 50 per cent.
The United Nations Children’s Fund reports a rapid increase in the number of young children experiencing severe wasting, the most serious form of malnutrition, which has significant implications for life expectancies and well-being.
An increased cost of living leads people to find coping strategies, such as purchasing cheaper and less nutritious food, consuming less diverse diets or skipping meals. This has serious long-term implications for people’s health, with social and economic consequences across societies.
More people are now forecast to be pushed into food insecurity and extreme poverty by the end of 2022. The most recent update from the World Food Programme (WFP) estimates that in 2022, 345 million people will be acutely food insecure in 82 countries with a WFP operational presence, implying an increase of at least 47 million acutely hungry people due to the ripple effects of the war in Ukraine in all its dimensions.
In early July, the United Nations Development Programme estimated that at least 71 million people have already been pushed into poverty in the three months since the start of the war.
In the 62 most vulnerable countries, food import bills have increased by $24.6 billion since the start of the war. The International Monetary Fund now suggests that not only are 60 per cent of low-income countries in debt distress or facing a high risk of debt distress, but so also are 30 per cent of middle-income countries.
Financial conditions in developing countries are worsening, due to a strengthening United States dollar.
Since the beginning of 2022, the currencies of developing economies have depreciated by 5.1 per cent against the U.S. dollar; as a result, developing country debts and import bills are coming under further pressure. Energy prices are still high, suggesting further turmoil in energy markets, with significant global implications..
UN chief António Guterres called for windfall taxes on oil and gas this week, arguing it is “immoral” for fossil fuel companies to reap record profits while ordinary people suffer from a cost of living squeeze.
In recent weeks, oil and gas companies have reported bumper profits. BP reported profits of $8.45bn between April and June this year – more than triple the amount it made at the same time last year. Exxon Mobil, Chevron, Shell and Total reaped $51bn between them and returned $23bn to shareholders in dividends and buybacks, according to news agencies.
“The combined profits of the largest energy companies in the first quarter of this year are close to $100 billion,” said the UN Secretary-General. “This grotesque greed is punishing the poorest and most vulnerable people, while destroying our only common home,” Guterres said during a media briefing.
“I urge all governments to tax these excessive profits, and use the funds to support the most vulnerable people through these difficult times.”
“Household budgets everywhere are feeling the pinch from high food, transport and energy prices, fuelled by climate breakdown and war. “This threatens a starvation crisis for the poorest households, and severe cutbacks for those on average incomes.”
As the war in Ukraine continues to rage, skyrocketing energy prices are compounding an existential cost-of-living crisis for hundreds of millions of people, the UN chief said as he introduced the third is a series of briefings from the Global Crisis Response Group (GCRG) on Food, Energy and Finance.
The brief from the GCRG recommends that governments find effective funding for energy solutions, such as publicly financed cash transfers and rebate policies to protect vulnerable communities, including windfall taxes on the largest oil and gas companies, while also advocating for a transition to more cost-effective renewables.
Since the COVID-19 pandemic, many countries that are already bearing the brunt of the cost-of-living crisis, continue to experience major difficulties accessing affordable energy.
“Developing countries don’t lack reasons to invest in renewables. Many of them are living with the severe impacts of the climate crisis including storms, floods and droughts,” said Mr. Guterres.
The brief makes clear that the Ukraine war and global energy crisis that it has caused, is a stark reminder that energy resilience and a stronger push for a renewable energy transition is needed.
Renewable energy production is often the lowest cost option, with the shortest installation time thanks to current technological development, and provides countries with energy security, while also reducing future exposure to volatile fossil fuel prices.
Aug. 2022
It’s time we all come together to address the global food crisis, by Abdulla Shahid, Gabriel Ferrero de Loma-Osorio - UN Committee on World Food Security
As parents and global citizens, we are very worried about the cost-of-living crisis that the world is facing – the worst in over a generation. The interlinked shocks of the COVID-19 pandemic, climate change and conflicts have thrown the global food, agricultural, financial and energy systems and markets into turmoil.
The ongoing war in Ukraine has added fuel to the already precarious poverty, hunger and malnutrition situation. Besides its tragic humanitarian toll, the war is extending human suffering to all corners of the world through widespread disruptions to the planting, harvesting, transport, and export of major agricultural commodities from the Black Sea region.
The war has also disrupted prices of and access to inputs like fuels and fertilisers. And in this context, we welcome the grain trade deal which offers a lifeline to millions, and strongly urge all parties to honour the agreement.
Even before the war, hunger and malnutrition were on the rise globally, with an unacceptable 823 million people going hungry in 2021 according to the recent edition of the State of Food Security and Nutrition in the World report by five United Nations agencies, including FAO, IFAD, UNICEF, WFP and WHO.
That said, the war has pushed an additional 50 million people into severe hunger in 2022 across the world. With food prices continuing to rise, another 19 million more people are expected to face chronic undernourishment globally in 2023.
These are not mere statistics but real people around the world, from Cairo to Caracas, Dhaka to Donetsk, who are going to bed hungry.
While everyone is squeezed by food price inflation, the poor are the hardest hit, especially in developing countries, where food accounts for half of a typical family’s budget.
They are finding it more and more difficult to afford the food needed to nourish their families, and are being forced to reduce food intake, sell their productive assets, or take their children out of school.
As a result, we are seeing years of progress in reducing hunger and poverty reversed, undermining efforts to achieve the Sustainable Development Goals (SDGs) by 2030 while exacerbating inequalities. The World Bank warns that the war in Ukraine is likely to plunge up to 95 million people into extreme poverty, making 2022 the second-worst year ever for poverty alleviation, behind only 2020.
The growing number of export bans and trade restrictions on wheat and other commodities are making the crisis worse. These actions are counterproductive and they must be reversed.
We note that representatives from more than 100 World Trade Organization member countries have recently taken action to step up their efforts to facilitate trade in food and agricultural products and reaffirmed the importance of refraining from export restrictions. In addition, the Group of Seven, which includes major food exporters like Canada, the European Union, and the United States, has pledged to avoid export bans and other trade-restrictive measures.
Food insecurity and malnutrition will remain a key challenge given the intensification of its drivers, including conflict, climate variability and extremes, and economic slowdowns, combined with the high cost of nutritious foods and growing inequalities.
In challenging circumstances like this, we are all called to come together, united in common responsibility, to address and solve the problem. As the UN secretary-general says: “It takes a world to fix the world.” For us, inaction is not an option.
We call on the international community to urgently support affected people, communities and countries through coordinated action. To succeed, all of us must work together to ensure our actions to address the crisis converge. Millions of lives are at stake and the world’s most vulnerable do not have the luxury of time for duplication or wastage of efforts.
Thankfully, we know what we need to do, together, to raise our ambition and deliver concrete actions.
First, stepping up humanitarian response for those already in need. However, addressing this crisis and the vicious cycles it creates calls for an approach that looks at the emergency today with our focus firmly fixed on strengthening livelihoods against future shocks.
Second, urgent stabilisation of markets, debt and commodity prices to immediately restore the availability, accessibility and affordability of food to enable all people everywhere to realise their right to food. We urge countries to continue releasing strategic food stockpiles and inputs into markets, minimise hoarding and other speculative behaviour, and avoid unnecessary trade restrictions.
Third, encourage increased local production by family farmers, small-scale food producers, small or medium-sized enterprises (SMEs) and cooperatives, as well as increased consumption of diverse food varieties; diversify sources of imported foods; and reduce food loss and food waste.
Fourth, restore fertiliser availability ensuring sustained and affordable access by smallholders and family farmers. This should go hand-in-hand with transformation to sustainable and inclusive production, including a commitment to increased efficiency in the use of energy and fertilisers, unleashing the potential of agroecology and other innovative approaches to sustainable agriculture.
Fifth, reinforce social protection systems needed to prevent vulnerable communities from sliding into poverty and furthering malnutrition. Examples of such measures include the time-proven school meals programme to address the impact of this crisis on children’s malnutrition, or cash transfer programmes to boost the purchasing power of poor households.
Sixth, countries need financial resources and the fiscal space to support strong national responses to the crisis. We need to fund existing international financing mechanisms; with the IMF and the international financial institutions (IFIs) playing an essential role. We urge countries that were proposing cuts to Official Development Assistance (ODA) commitments to reconsider their decisions and instead respect the target to direct 0.7 percent of their national incomes to ODA.
Lessons from the 2007-08 food crisis, as well as from the COVID-19 pandemic more recently, show that meaningful and principled policy response should support country-led coping strategies that involve all of society: from farmers to consumers, civil society, and businesses, especially those most affected by the food crisis.
The UN secretary-general’s Global Crisis Response Group is providing joint analysis and policy recommendations from the whole of the UN System. We must ensure that our responses are consistent with and guided by the SDGs, which are the comprehensive blueprint for sustainable development.
Importantly, we must remain committed to sustainable transformation of our food systems. Only then will we deliver sufficient, safe, affordable, and nutritious food for all people, provide employment and income particularly in rural areas, while at the same time fully respecting planetary boundaries.
The imperative to act on the transformation of our food systems is greater now than ever. We must do everything possible to end this food crisis and forestall future ones. We have the tools and resources to make it happen. It is time to act together to ensure no one is left behind.
* Abdulla Shahid is the 76th President of the United Nations General Assembly; Gabriel Ferrero de Loma-Osorio is the Chairperson of the UN Committee on World Food Security (CFS), extract published by Al Jazeera.
* Statement to the UN General Assembly meeting on Coordinating Policy Responses to the Global Food Crisis by the Civil Society and Indigenous Peoples’ Mechanism of the Committee on World Food Security:
June 2022 (Extract)
More than three months since the start of the war in Ukraine, people globally are facing a cost-of-living crisis not seen in more than a generation, with escalating price shocks in the global food, energy and fertilizer markets - in a world already grappling with the COVID-19 pandemic and climate change.
An estimated 1.6 billion people in 94 countries are exposed to at least one dimension of the crisis, and about 1.2 billion of them live in ‘perfect-storm’ countries which are severely vulnerable to all three dimensions – food, energy and finance - of the cost-of-living crisis, according to the latest findings of the United Nations Secretary-General’s Global Crisis Response Group (GCRG) on food, energy and finance systems.
“For those on the ground in Ukraine, every day brings new bloodshed and suffering. And for people around the world, the war, together with the other crises, is threatening to unleash an unprecedented wave of hunger and destitution, leaving social and economic chaos in its wake,” warned Secretary-General Antonio Guterres at the launch of the GCRG’s latest brief.
“Vulnerable people and vulnerable countries are already being hit hard, but make no mistake: no country or community will be left untouched by this cost-of-living crisis.”
After two years of fighting COVID-19, the world economy has been left in a fragile state. Today, 60 per cent of workers have lower real incomes than before the pandemic; 60 per cent of the poorest countries are in debt distress or at high risk of it; developing countries miss $1.2 trillion per year to fill the social protection gap.
The ability of countries and people to deal with adversity has therefore also been eroding. As the war erupted, global average growth prospects have been revised downward; many countries’ fiscal balances have deteriorated, and the average household has lost 1.5 per cent in real income due to price increases in corn and wheat alone.
Worldwide, more people have been facing famine-like conditions, and more people have faced severe hunger emergencies. The lingering effects of the pandemic, coupled with the war in Ukraine and the impacts of climate change, are likely to further increase the numbers of people experiencing poverty. And as poverty increases so does vulnerability, particularly for women and girls. Countries and people with limited capacity to cope are the most affected by the ongoing cost-of-living crisis.
Three main transmission channels generate these effects: rising food prices, rising energy prices, and tightening financial conditions. Each of these elements can have important effects on its own, but they can also feed into each other creating vicious cycles - something that unfortunately is already happening.
For instance, high fuel and fertilizer prices increase farmers’ production costs, which may result in higher food prices and lower farm yields. This can squeeze household finances, raise poverty, erode living standards, and fuel social instability. Higher prices then increase pressure to raise interest rates, which increase the cost of borrowing of developing countries while devaluing their currencies, thus making food and energy imports even more expensive, restarting the cycle.
These dynamics have dramatic implications for social cohesion, financial systems and global peace and security. Food should never be a luxury; it is a fundamental human right. And yet, this crisis may rapidly turn into a food catastrophe of global proportions.
Higher energy costs, trade restrictions and a loss of fertilizer supply from the Russian Federation and Belarus have led to fertilizer prices rising even faster than food prices. Many farmers, and especially smallholders, are thus squeezed to reduce production, as the fertilizers they need become more expensive than the grains they sell. Critically, new fertilizer plants take at least two years to become operational, meaning that most of the current supply of fertilizers is limited. Because of this key fertilizer issue, global food production in 2023 may not be able to meet rising demand.
Rice, a major staple which up to now has low prices because of good supplies, and is the most consumed staple in the world, could be significantly affected by this phenomenon of declining fertilizer affordability for the next season.
Time is short to prevent a food crisis in 2023 in which we will have both a problem of food access and food availability. If the war continues and high prices of grain and fertilizers persist into the next planting season, food availability will be reduced at the worst possible time, and the present crisis in corn, wheat and vegetable oil could extend to other staples, affecting billions more people.
In one way or another, everyone is exposed to the shock waves of the war. The level of exposure of a country and its ability to deal with the shock determine a country’s vulnerability. And this is a challenge in the developing world.
The UN Global Crisis Response Group, together with the United Nations Regional Economic Commissions, undertook a global vulnerability assessment on the capacity of countries to cope with each of the channels of transmission and the vicious cycles they can create.
The results confirm a widespread picture of vulnerability: 94 countries, home to around 1.6 billion people, are severely exposed to at least one dimension of the crisis and unable to cope with it. Out of the 1.6 billion, 1.2 billion or three quarters live in ‘perfect-storm’ countries, meaning countries that are severely exposed and vulnerable to all three dimensions of finance, food, and energy, simultaneously.
This vulnerability of Governments and people can take the form of squeezed national and household budgets which force them into difficult and painful trade-offs. If social protection systems and safety nets are not adequately extended, poor families in developing countries facing hunger may reduce health-related spending; children who temporarily left school due to COVID-19 may now be permanently out of the education system; or smallholder or micro-entrepreneurs may close shop due to higher energy bills.
Meanwhile countries, unless a multilateral effort is undertaken to address potential liquidity pressures and increase fiscal space, will struggle to pay their food and energy bills while servicing their debt, and increase spending in social protection as needed.
The clock is ticking, but there is still time to act to contain the cost-of-living crisis and the human suffering it entails. Two broad and simultaneous approaches are needed:
1. Bring stability to global markets, reduce volatility and tackle the uncertainty of commodity prices and the rising cost of debt. There will be no effective solution to the food crisis without reintegrating Ukraine’s food production, as well as the food and fertilizer produced by the Russian Federation into world markets – despite the war.
2. Increase people and countries’ capacity to cope. This means helping the most severely exposed countries help their poor and vulnerable populations, by increasing countries’ fiscal space and liquidity access so that they can strengthen social protection systems and safety nets and hence enhance the ability of people to deal with adversity.
Taken together, this suggests – as the United Nations Secretary-General said recently – that “there is no answer to the cost-of-living crisis without an answer to the finance crisis”.
All available rapid disbursement mechanisms at international finance institutions must be reactivated, and a new emission of Special Drawing Rights must be pursued. To succeed, strong political will across the multilateral community is needed. Piece-meal approaches will not work. What will, is a comprehensive approach that looks at the emergency today without forgetting about the future.
The vicious cycles this crisis creates shows that no one dimension of the crisis can be fixed in isolation. This crisis touches all of us. It is everyone’s problem and a common responsibility. Yet, we must accept that not everyone is affected equally. Some countries, communities and people are more vulnerable than others, and those need to be assisted first. It takes a world to fix a world, what is needed now is to start.
According to the brief, the increase in hunger since the start of the war could be higher and more widespread. World Food Programme estimates show that the number of severely food insecure people doubled from 135 million pre-pandemic to 276 million over just two years. The ripple effects of the war in Ukraine, however, are expected to drive this number up to 323 million in 2022.
The Food and Agriculture Organization’s latest food price index had already reached a record high in February 2022 before the war started, since then it has had some of the largest one-month increases in its history.
Despite the widespread impact of the crisis, not all regions and subregions are exposed in the same way, says the report, stressing the fact that some countries and communities are more vulnerable than others and need assistance urgently.
Countries in Sub-Saharan Africa, for example, remain significantly vulnerable with one out of every two Africans in the region exposed to all three dimensions of the crisis. The Latin America and the Caribbean region is the second largest group facing the cost-of-living crisis with nearly 20 countries deeply affected.
In South Asia, which is currently experiencing crippling levels of heatwaves, 500 million people are severely exposed to the food and finance crisis. Countries in Eastern Europe and Central Asia are severely exposed to the energy and finance dimensions, given the importance of remittances and energy exports from Russia.
The brief makes policy recommendations to address the cost-of-living crisis, highlighting immediate action on two critical fronts - the urgent need for stability in the global food and energy markets to break the vicious cycle of rising prices and the imperative to bring relief to developing countries, calling on resources to be made available immediately to help the poorest countries and communities.
“There is no solution to this global crisis without a solution to the economic crisis in the developing world. The global financial system must rise above its shortcomings and use all the instruments at its disposal, with flexibility and understanding, to provide support to vulnerable countries and vulnerable people,” stressed Guterres.
“The message of today’s report is clear and insistent: we must act now to save lives and livelihoods over the next months and years. It will take global action to fix this global crisis.”
* In a number of African countries basic food costs have risen by up to 30%. Globally, rising inflation driven by increasing fuel and food costs and supply chain disruptions are undermining household budgets, impacting low income and working people significantly.
* Access the report:

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