Davos 2023: Consumers can help in tackling cost-of-living crisis, says World Economic Forum

The cost of living is climbing at an exceptionally fast pace in many countries as inflation has reached a multiyear high due to steep hikes in the prices of energy and food since last year. The World Economic Forum (WEF), in a recent blog post, noted that the cost-of-living crisis is at a high mainly due to the twin shocks of Covid-19 and the war in Ukraine.  

Russian premier Vladimir Putin’s decision to invade Ukraine in February 2022 caused food prices to shoot up primarily due to the importance of both countries in producing commodities such as wheat. It also pushed the price of energy, a factor that continues to trouble businesses and households alike. 

The economic impacts of the Russian invasion of Ukraine are rippling out across the globe in a cost-of-living crisis that’s pushing millions more people into poverty. As per UN Development Programme (UNDP), soaring food and energy prices have resulted in 71 million people in developing countries falling into poverty. The blog quotes UNDP Administrator Achim Steiner as saying: “Unprecedented price surges mean that for many people across the world, the food that they could afford yesterday is no longer attainable today."

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While supply-chain disruptions from the Covid-19 pandemic had already pushed up prices, inflation is rising due to further disruptions caused by the war in Ukraine.  

The WEF blog post noted that most developed countries are facing a major struggle due to the food crisis. In May, an Ipsos poll for the WEF found that 1 in 4 people were struggling financially in 11 developed countries. In the UK, as many as 1 in 7 adults now say they can’t afford to eat every day. 

Easing the crisis 

The global economic body said that after analysing the trends in three countries -- Kenya, Indonesia, and Ecuador -- it found that the market is flooded with cheap food imports, which is harming the local producers. The international non-governmental organisation said that such cheap food imports create an unsustainable market, volatility when global prices rise, and a lack of healthy choices for consumers.  

This, in turn, affects the consumers as they pay a high price for the imports. “Consumers are now heavily paying the price – literally and figuratively – for the market dominance of suddenly insecure imported crops,” the blog post stated. 

Solutions in hand 

The WEF said the food crisis and high prices can be eased with short- and longer-term measures. This means emergency support for the vulnerable but also addressing systemic supply chain issues with countries adopting being supported to adopt more diverse, sustainable, and local agriculture.  

It added that countries should develop inclusive governance frameworks, where the voice of the consumers and producers are considered. 

“Though the adoption of these resolutions will take time, in the long term it will do far more to empower consumers, help local farmers, meet climate goals and long-term stability. Too often those who wish to delay such progress conflate scare tactics on price with consumer rights. But our research shows that protecting consumers and their rights is actually an essential part of any just transition and will save consumers money,” the WEF said.