Cost-of-living crisis

Effects on society

Summarize

Perspective

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]

Remove ads

By region

Summarize

Perspective

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

In late 2021, the prices of many essential goods in the United Kingdom began increasing faster than household incomes, resulting in a fall in real incomes. The phenomenon has been termed a cost-of-living crisis. It is due in part to the economic impact of the COVID-19 pandemic, including a global surge in inflation, as well as the economic instability caused by Brexit and the Russian invasion of Ukraine.

While all in the UK are affected by rising prices, the crisis most substantially affects low-income persons. The British government has responded with measures including grants, tax rebates, and subsidies to electricity and gas suppliers. Regular pay began to outpace inflation beginning in May 2023,^[23] but living costs have remained at elevated levels, and have continued to increase faster than headline inflation into 2025.^[24]