IMF Warns Cost-of-Living Shocks Cause 'Lasting Deterioration' in Affordability
The fund said temporary income support is more efficient than broad subsidies as 23 million more people fell below the extreme poverty line.
- On Tuesday, the International Monetary Fund warned that food and energy price spikes are increasingly persistent, driving inflation expectations higher while worsening global poverty and macroeconomic stability.
- Recurring price surges over the past five years were fueled by Russia's invasion of Ukraine and the Iran war, which pushed global inflation to 4.7% in 2026.
- IMF economist Chiara Maggi noted that cost-of-living crises "impact price stability, they reduce living standards and they worsen inequality," as a new model suggests 23 million more people fell below the extreme poverty line.
- The Fund urged countries to avoid broad-based subsidies, noting that producer subsidies can cost 22 times more to implement than "targeted and temporary transfers" for vulnerable populations.
- Georgetown University professor Shantayanan Devarajan warned that low-income countries face critical risks as growth slows, urging leaders to implement reforms before the full World Economic Outlook update releases next week.
57 Articles
57 Articles
Food and energy improvements will be more frequent, officials of the International Monetary Fund said, warning that such crises are worsening poverty and threatening economic stability. The IMF research published on Tuesday analyzed three decades of strategies used by governments to mitigate price increases, as well as a new economic model that takes into account inflation...
The International Monetary Fund (IMF) warns that the series of crises that have occurred over the past five years, the COVID-19 pandemic, the war in Ukraine and the Middle East conflict, has an adverse effect on purchasing power and living standards, and the effects extend over the long term. "Population is not only facing a temporary explosion in food and energy prices, but also a long-term decline in the accessibility of goods of strict necess…
It is being more persistent than previously anticipated, they point out
The rise in the cost of living, driven by wars in the Middle East and Ukraine, is lasting longer than initially expected, the International Monetary Fund (IMF) said, warning that people are not only facing higher food and energy prices but also a persistent deterioration in the affordability of essential goods compared to other products.
Surging food, energy costs erode real wages, disproportionately hurting poorer households, fund says
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