Cost-of-living crisis

Short description: Situation where prices of essentials rise faster than wages

2012 Aysén protests due to the high cost of living in Patagonia

A cost-of-living crisis is a socioeconomic situation or period of high inflation where nominal wages have stagnated while there is a sharp increase in the cost of basic goods, such as food, housing, and energy. As a result, living standards are squeezed to the point that people cannot afford the standard of living that they were previously accustomed to. Public health is threatened.[1] The population becomes 'poorer' than it used to be in real terms. This is in contrast to a situation in which wages are rising to meet the rate of inflation and workers' standard of living remains unchanged.[2]

During the 2020s, a cost-of-living crisis impacted many countries around the world amid global inflation.[3][4] In February 2023, 3 out of 4 consumers globally were worried about the rising cost of everyday expenses.[5] The Big Issue defines a cost of living crisis as "a situation in which the cost of everyday essentials like groceries and bills are rising faster than average household incomes".[6] Change in average real incomes can be measured by real GNI per capita change.

## Contents

* 1 Effects on society
* 1.1 Health
* 1.2 Job market
* 1.3 Business and investments
* 1.4 Spending and debt
* 2 By region
* 2.1 Australia
* 2.2 Brazil
* 2.3 Canada
* 2.4 United Kingdom
* 2.5 New Zealand
* 3 See also
* 4 References

## Effects on society

### Health

Cost-of-living crises have had significant and wide-ranging negative consequences for mental and physical well-being.[7] For example, high food prices force people to choose to eat foods with less nutritional value or less food in general. This leads to a higher rate of obesity (due to higher cheap carbohydrate consumption) or undernutrition, and, by extension, less energy and lowered performance at school or work. Worse nutrition also leads to a higher likelihood of getting sick from infectious diseases. In poorer countries, there is a higher risk of starvation.[8][9]

Mental health also declines across the board due to the stress of being unable to afford to live properly. Rates of depression and anxiety increase. People are also more likely to lose sleep, forego meeting with friends, not engage in their hobbies, and skip out on exercising. A cost-of-living crisis will lead to a higher demand for social and health services. However, higher operating expenses and a lack of staff to meet the higher demand will result in squeezed budgets and worse service. Overworked and underpaid staff will also be more likely to quit, creating a vicious cycle.[10][11]

### Job market

Workers are more likely to quit their job and switch to a higher-paying one because their current job no longer pays enough to cover their lifestyle expenses.[12] Workers are most likely to strike in an effort to improve their circumstances.[13]

### Business and investments

Small businesses will be negatively affected due to higher material and energy prices.[14] Customers also have less purchasing power, and so will purchase fewer items from companies who do not sell essential goods.[15] It becomes more difficult to predict investment returns because of market volatility and uncertainty. People are also less likely to invest in businesses or the stock market because they have less disposable income.[16]

### Spending and debt

Consumer confidence drops.[17] Non-essential spending is reduced, with luxury goods, travel and fashion seeing the greatest declines.[18] People are more likely to take on debt in order to keep up with bills and living expenses.[19]

## By region

In 2022, The Guardian reported that numerous countries were being impacted by a cost of living crisis, including Belgium, Germany, India, Nigeria, Philippines, South Africa and Taiwan.[4]

### Australia

In the 2020s, Australia faced a cost of living crisis, impacting food security and increasing demands for food banks.[20]

### Brazil

In 2022, Brazil saw double digit inflation rates.[21] Despite Brazil being an agricultural powerhouse, food prices are rising.[21]

### Canada

In 2024, CBC News reported many Canadians were struggling amidst rising living costs and working multiple jobs.[22]

### United Kingdom

This section is an excerpt from 2021–present United Kingdom cost-of-living crisis[ edit ]

### New Zealand

New Zealand is currently experiencing a cost-of-living crisis, with increasing unemployment and a contracting GDP alongside record numbers leaving the country, but The Treasury and Reserve Bank government departments expect New Zealand's economy to make an economic turnaround sometime between 2026 and 2030.

## See also

* 2021–2023 inflation surge
* Cost-of-living index
* Distribution of wealth
* Housing bubble

## References

1. ↑ Dunn, H.; Lowe, R.; Mahmood, H. (2024). "A mixed methods evaluation of the impact of a cost-of-living policy and practice hub on integrated care strategies". Public Health 234 (September 2024): 33–36. doi:10.1016/j.puhe.2024.05.034. PMID 38943833. https://www.sciencedirect.com/science/article/abs/pii/S0033350624002282. Retrieved 1 September 2024.
2. ↑ "Cost-of-Living Crisis: How Does It Impact Companies and…". 21 November 2022. https://www.euromonitor.com/article/cost-of-living-crisis-how-does-it-impact-companies-and-consumers.
3. ↑ "What the cost of living crisis looks like around the world" (in en). https://www.rescue.org/article/what-cost-living-crisis-looks-around-world.
4. ↑ 4.0 4.1 team, Reporting (2022-06-20). "From New Zealand to Nigeria: the global toll of the cost of living crisis" (in en-GB). The Guardian. ISSN 0261-3077. https://www.theguardian.com/world/2022/jun/20/global-toll-cost-of-living-crisis.
5. ↑ "Euromonitor – A Look at the Cost of Living in 2023" (in en). https://lp.euromonitor.com/infographic/cost-of-living-crisis-2023/.
6. ↑ Webster, Premila; Neal, Keith (September 2022). "The 'cost of living crisis'". Journal of Public Health 44 (3): 475–476. doi:10.1093/pubmed/fdac080. PMID 36038510. https://academic.oup.com/jpubhealth/article/44/3/475/6675217. Retrieved 4 June 2024.
7. ↑ Norman, Mark (6 July 2022). "Cost of living: How the crisis is affecting our health". BBC. https://www.bbc.com/news/uk-england-kent-61998351.
8. ↑ "How is the cost of living crisis affecting public health?" (in en). https://www.economicsobservatory.com/how-is-the-cost-of-living-crisis-affecting-public-health.
9. ↑ "The cost-of-living crisis is a public health issue". 3 February 2023. https://blogs.lse.ac.uk/politicsandpolicy/the-cost-of-living-crisis-is-a-public-health-issue/#:~:text=This has significant and wide,as arthritic and respiratory conditions..
10. ↑ "How is the cost of living crisis affecting public health?" (in en). https://www.economicsobservatory.com/how-is-the-cost-of-living-crisis-affecting-public-health.
11. ↑ "Mental health and the cost-of-living crisis report: another pandemic in the making?" (in en). https://www.mentalhealth.org.uk/our-work/policy-and-advocacy/mental-health-and-cost-of-living-crisis-report.
12. ↑ Christian, Alex (13 July 2023). "How the cost-of-living crisis is fuelling job quits" (in en). https://www.bbc.com/worklife/article/20230713-how-the-cost-of-living-crisis-is-fuelling-job-quits.
13. ↑ Bai, Stephanie (21 July 2023). "A wave of strikes has hit Canada. What does this say about our labour market?". https://macleans.ca/society/strikes-employment-union-wages/.
14. ↑ "How will the cost of living crisis hit your small business?" (in en). https://bionic.co.uk/blog/small-business-cost-of-living-crisis/.
15. ↑ Kollewe, Julia (3 April 2023). "Half of all UK consumers have cut non-essential spending". https://www.theguardian.com/business/2023/apr/03/half-of-all-uk-consumers-have-cut-non-essential-spending.
16. ↑ "The cost of living crisis and how it impacts investments" (in en). https://www.linkedin.com/pulse/cost-living-crisis-how-impacts-investments-wealthkernel.
17. ↑ "Rising cost-of-living pushes consumer confidence to all-time low" (in en). https://www2.deloitte.com/uk/en/pages/press-releases/articles/rising-cost-of-living-pushes-consumer-confidence-to-all-time-low.html.
18. ↑ "69% of consumers hold back on non-essential spend as cost of living rises; 90% adopt cost-saving behaviours: PwC Consumer Insights Survey" (in en-gx). https://www.pwc.com/gx/en/news-room/press-releases/2023/global-consumer-insights-pulse-survey-february-2023.html.
19. ↑ Suhanic, Gigi (1 June 2023). "Posthaste: Canadians walk financial tightrope as consumer debt hits record $2.3 trillion". https://financialpost.com/news/canadian-consumer-debt-fresh-record-cost-of-living-rises.
20. ↑ "As the cost-of-living crisis takes its toll on Australians, some are looking outside the box for solutions" (in en-AU). ABC News. 2024-07-16. https://www.abc.net.au/news/2024-07-17/cost-of-living-australians-food-insecurity-poverty-line/104098832.
21. ↑ 21.0 21.1 "Cost of living crisis: Relying on food handouts and moving country". BBC. 30 May 2022. https://www.bbc.com/news/world-61584608.
22. ↑ Mullin, Malone; Antle, Sarah (1 January 2024). "We asked, you answered: Here's how Canadians are working to survive the cost of living crisis". https://www.cbc.ca/news/canada/newfoundland-labrador/the-grind-submissions-1.7043269.

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