IMF warns cost-of-living shocks cause 'lasting deterioration' in affordability
Summary
The IMF warns that wars in Ukraine and Iran, along with pandemic-era supply shocks, have kept food and energy prices elevated for years and caused a lasting decline in affordability. It says the burden falls hardest on working-class households and urges targeted support instead of broad subsidies.
Key Points
- The IMF says price shocks for necessities such as food and energy have proved more persistent than previously expected.
- Wars in Ukraine and Iran, together with earlier pandemic supply disruptions, have kept global commodity prices elevated.
- The Fund warns that inflation can stay high long after the initial shock, worsening poverty, inequality, and macroeconomic stability.
- The IMF recommends targeted and temporary transfers instead of broad subsidies, noting that many low-income countries lack fiscal space.
