Cost-of-living crisis

A cost-of-living crisis refers to a socioeconomic situation or period of high inflation where nominal wages have stagnated while there is a sharp increase in the cost of basic goods, such as food, housing, and energy. As a result, living standards are squeezed to the point that people cannot afford the standard of living that they were previously accustomed to. Public health is threatened.^[1] The population becomes poorer than it used to be in real terms. This is in contrast to a situation in which wages are rising to meet the rate of inflation and workers' standard of living remains unchanged.^[2]

As of 2023, there is a cost-of-living crisis in many countries around the world.^[3] In February 2023, 3 out of 4 consumers globally were worried about the rising cost of everyday expenses.^[4] The Big Issue defines a cost of living crisis as ‘a situation in which the cost of everyday essentials like groceries and bills are rising faster than average household incomes’.^[5] Change in average real incomes can be measured by real GNI per capita change.