Although the World Food Price Index has come down from its highs in recent months, rising costs of living, especially food and fuel as is the case in Japan, are hitting consumers in vulnerable segments of society worldwide, hampering efforts to reduce poverty.

According to an analysis of a report by the United Nations, a 10% increase in food prices could reduce the incomes of the poorest by 5%, with an impact equivalent to the loss of income that they would normally spend on health care. The long-term effects of the pandemic, the war in Ukraine, and the impact of climate change are projected to further test the poor. Countries and social groups with limited capacity to cope are more affected by the recent rise in the cost of living. The report noted that the three main transmission channels - rising food prices, rising energy prices, and tightening financial conditions - are creating a vicious cycle. For example, high fuel and fertilizer prices are forcing farmers to face higher production costs, which in turn are reflected in higher food prices and lower yields. This, in turn, can put pressure on household finances, leading to increased poverty, falling living standards, and social unrest. Rising prices will lead to upward pressure on interest rates, which will increase the cost of borrowing for developing countries, depreciate the value of their currencies, and further raise the prices of food and fuel imports, creating a vicious cycle.

The report emphasized that while the current crisis is a problem faced by all people, it is necessary for the international community to identify the needs of those segments of society most affected by the crisis and to work to solve the problem from what it can do.

Contributor: IIYAMA Miyuki (Director, Information Program)