With global food and energy prices surging ahead, about 71 million people in the developing world have fallen into poverty in just three months, and the impact of this poverty rate is seen drastically faster than the shock of COVID-19 pandemic.
In an analysis of 159 developing countries, the latest report from UN Development Programme (UNDP) indicate that price spikes in key commodities is already having immediate and devastating impacts on the poorest households, with clear hotspots in the Balkans, countries in the Caspian Sea region and Subt Saharan Africa (in particular the Sahel region).
The analysis mentions of a risk of further recession induced poverty that will exacerbate the crisis even more, accelerating and deepening poverty worldwide if interest rates rise in response to soaring inflation.
UNDP Administrator Achim Steiner said “unprecedented price surges mean that for many people across the world, the food that they could afford yesterday is no longer attainable today.”
“This cost-of-living crisis is tipping millions of people into poverty and even starvation at breathtaking speed and with that, the threat of increased social unrest grows by the day,” he said.
Between half and two thirds of the 12-month international price increase in energy, sunflower seed oil and corn has occurred since Russia’s invasion of Ukraine, whereas for wheat and some of the main fertilizers, the contribution of the post-invasion subperiod ranges from 30 to 40 percent, the UNDP report said.
Steiner also opined that the world is witnessing an alarming growing divergence in the global economyas 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. “Yet new international efforts can take the wind out of this vicious economic cycle, saving lives and livelihoods — that includes decisive debt relief measures; keeping international supply chains open; and coordinated action to ensure that some of the world’s most marginalized communities can access affordable food and energy,” he added.
The report finds that targeted cash transfers are more equitable and cost-effective than blanket subsidies. While blanket energy subsidies may help in the short term, they drive inequality in the longer term and further exacerbate the climate crisis, and do not soften the immediate blow of the cost-of-living increase as much as targeted cash transfers do,” says report author George Gray Molina, UNDP Head of Strategia Policy Engagement. “They offer some relief as an immediate band-aid, but risk causing worse injury over time.”