FIGURE 1.4 Price hikes in basic necessities, 2020-2022 30 High income 30 Upper-middle income 25 25 20 20 centage)15 15 10 10 5 5 Inflation (per0 0 -5 -5 Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep 2020 2021 2022 2020 2021 2022 30 Lower-middle income 30 Low income 25 25 20 20 15 15 10 10 5 5 0 0 -5 -5 Jan MayMayMay SepSepSep Jan MayMay SepSep Jan MayMay SepSep Jan May Sep Jan May Sep Jan May Sep 2020 2021 2022 2020 2021 2022 CPI all items Food and non-alcoholic beverages Housing, water, electricity, gas and other fuels Source Note IMF, Consumer Price Index. Median year-on-year inflation, by income group. economies. Global mortgage rates have reached their concerns, leaving emerging and developing countries highest level in more than a decade. Some estimates with far less 昀椀scal room to protect their populations in suggest that the increase in rates amounts to a 35% the future. increase in mortgage payments for homeowners.6 Rent in昀氀ation has also followed suit – in the United Both affordability and availability of basic necessities States of America, it is estimated to peak at over 8% can stoke social and political instability. Last year, 7 in May this year before easing, disproportionately the increase in fuel prices alone led to protests in affecting lower socioeconomic groups who are more an estimated 92 countries, some of which resulted likely to rent but least able to afford rental price hikes. in political upheaval and fatalities, alongside strikes 10 Retirees will also be impacted as pensions fail to and industrial action. The impact of insecurity will 8 keep pace with higher in昀氀ation. Higher costs of food, continue to be felt most acutely in already vulnerable energy and housing, causing lower real incomes, will states – including Somalia, Sudan, South Sudan and result in trade-offs in essential spending, worsening the Syrian Arab Republic – but may also exacerbate health and wellbeing outcomes for communities. instability in countries facing simultaneous food and debt crises, such as Tunisia, Ghana, Pakistan, Egypt 11 Economic impacts are often cushioned by expansive and Lebanon. 昀椀scal policy and government programmes in 9 countries that can afford them. Advanced economies A combination of extreme weather events and continue to roll out measures, many of which have constrained supply could lead the current cost-of- been broad-brush in approach – ranging from caps living crisis into a catastrophic scenario of hunger on electricity bills, fuel rebates and subsidized public and distress for millions in import-dependent transport tickets for consumers, to export controls countries or turn the energy crisis towards a on food, tax relief, enhanced state aid and support humanitarian crisis in the poorest emerging markets. for affected companies. The resulting pressure on Energy shortages – as a result of supplier shut- 昀椀scal balances may exacerbate debt sustainability offs or natural, accidental or intentional damage Global Risks Report 2023 16