All around the globe, everyday goods and services are getting more expensive. Rising costs are making life more difficult for many as they struggle to afford necessities such as groceries, gasoline and rent.
“Cost of living” is a term coined by economists for the amount of money needed to maintain a certain quality of life while paying for housing, food, taxes and health care. For instance, the inflation rate in the United States has hovered between 8 and 9 percent in the past months, signifying a rising cost of goods across the country.
A rising cost of living causes pain even in wealthy countries. In regions already facing conflict, natural disasters or other crises, the results can be catastrophic. Below, learn about five countries where severe cost-of-living increases have led to humanitarian crises.
Afghanistan’s cost-of-living crisis
Since the shift in power in Afghanistan in August 2021, the country has experienced near economic collapse and a worsening humanitarian crisis. Policies meant to isolate the Taliban by cutting off Afghanistan from the international financial system have crippled the national economy. While less money is flowing into Afghanistan, prices for basic household items rose 50 percent, while prices of food staples like grain and rice nearly doubled in 2021.
The resulting crisis is so severe, it could kill more people than the last 20 years of war.
Forty-three percent of the population lives on less than a meal a day, while 97 percent could soon be living below the poverty line. Access to health care is becoming more strained, leaving 12 million people unable to obtain critical services.
Afghanistan also abruptly lost large portions of foreign aid after the change in power, equivalent to about a 40 percent loss of the country’s GDP.
The IRC in Afghanistan
The IRC operates across 12 provinces and provides vital health services, education and support for women and girls in communities where we have developed deep relationships with community leaders.
Lebanon’s cost-of-living crisis
One of the most severe inflation crises ever recorded has led to economic collapse in Lebanon. All people living in Lebanon: Lebanese, migrants and the 1.5 million Syrian refugees seeking safety there are struggling to afford basic needs. In some cases, they are not even able access their own money from the banking system.
Over the last few years, Lebanon’s GDP has shrunk from $55 billion in 2018 to just $20.5 billion in 2021. The Lebanese pound has lost 95 percent of its value.
The price of goods has risen while the value of wages has fallen, forcing consumers to turn to the black market for fuel and medicine. The 2020 explosion of a large amount of improperly stored ammonium nitrate at the Port of Beirut worsened the crisis, causing $3.8–$4.6 billion in damage.
With inflation at 162.47 percent in September, poverty rates have sky-rocketed. One UN report found that nearly three quarters of the population were experiencing poverty. Refugees are particularly affected; nearly half of all Syrian families in Lebanon are food insecure.
The IRC in Lebanon
The IRC has provided humanitarian support to refugees and the Lebanese communities hosting them since 2012. We also responded to the 2020 explosion in Beirut, delivering cash relief and various psychosocial support programs.
Pakistan’s cost of living crisis
Pakistan was approaching a cost-of-living crisis even before the devastating floods. This climate-induced disaster pushed the country over the brink and will necessitate a long-term economic recovery. The country is facing its highest inflation rate in decades. Meanwhile, the domestic currency continues to depreciate and foreign reserves are running low.
The recent flooding, which submerged one-third of the country, exacerbated the situation with well over $10 billion in damages. Around 3.6 million acres of crops and over 1.1 million livestock were destroyed. The damages to Pakistan's agricultural industry will depress both earnings and the availability of food, increasing hunger in a country already facing a shortage of wheat due to the conflict in Ukraine.
In the short term, the country needs help to rebuild and families need assistance to secure basic needs such as food and shelter.
The IRC in Pakistan
The IRC began its work in Pakistan in 1980. We have provided public health, environmental health, education, disaster-risk reduction, community services, and livelihood support. Most recently, our teams mobilized quickly after the floods to provide food supplies, dignity and hygiene kits, basic household items, and to set up medical response centers to assist people impacted by the floods.
Somalia’s cost-of-living crisis
The economic fallout from the Ukraine war and a series of climate-induced disasters have left Somalia on the brink of famine.
For nearly six months, war prevented Ukraine from shipping grain through their primary trade routes in the Black Sea. Somalia, which historically imports 92 percent of its grain from Ukraine, suffered a sharp rise in malnutrition rates.
Somalia is also highly vulnerable to climate shocks and is one of the countries most impacted by climate change, despite contributing less than 0.1% of global CO2 emissions. The country has been experiencing extreme drought and has entered its fifth consecutive failed rain season. Consequently, crop yields are failing en masse while herders struggle to keep their animals alive through tough conditions.
Even when food is made available, the depreciation of the Somali shilling and growing inflation has made it more difficult for Somalis to afford it. Since April, the number of people in Somalia facing famine conditions has increased by 160 percent. More than half a million children below the age of 5 are expected to suffer from severe malnourishment this year.
The IRC in Somalia
Over 2,000 IRC staff in Somalia and the greater East Africa region are scaling up our programs to address the current drought and rising food insecurity. The IRC is providing nutrition, water and sanitation, women's protection and empowerment, and cash assistance services to drought-affected populations across East Africa.
Venezuela’s cost-of-living crisis
Since 2014, Venezuela has been facing one of the sharpest economic collapses ever seen. Hyperinflation has caused the price of food and other basic goods to soar, leading to a humanitarian crisis that has forced more than 7.1 million people to leave the country. Those who remained in Venezuela saw their national economy shrink by two-thirds between 2014 and 2020.
Approximately one in four Venezuelans were in need of humanitarian aid in 2019, before the COVID-19 pandemic worsened the country’s economic struggles. Today, that number is likely higher.
Although the Venezuelan economy is seeing some signs of recovery, the damage caused by almost a decade of economic unraveling will continue to affect the country. Struggles to access medical care are exacerbating resurging outbreaks of cholera and malaria.
Meanwhile, Venezuelans looking to rebuild their lives in other countries, mainly Colombia, Ecuador and Peru, continue to live under financial duress and face challenges like xenophobia and hurdles to integration. Of the 7.1 million Venezuelans displaced abroad, an estimated 3.5 million are in need of food assistance. Many of these countries face their own developmental challenges and are also still reeling from the impacts of the pandemic.
The IRC in Venezuela
The IRC is working to support Venezuelans at home and abroad. We help integrate Venezuelans in their new communities and work to ensure that governments can respond to the needs of both Venezuelans and their host communities. This work includes, among other services, cash assistance and programs designed to promote financial independence and stability; gender based violence prevention and response; and programs designed to promote child safety, education and development. In addition, our Signpost project, InfoPa’lante, helps provide crucial information to Venezuelans arriving in Colombia and Ecuador.