The cost of living crisis: an overview

A cost of living crisis is a state of affairs where most people cannot afford to buy essential goods and services, which are required for “living”. It can be produced by rising prices, stagnant or declining incomes, or a combination thereof. In an extreme case, a cost of living crisis arises when people lose their incomes, in which case they cannot afford to buy essential goods and services, even under conditions of price stability. A cost of living crisis on steroid occurs when a country experiences hyperinflation. The current cost of living crisis is a product of rising prices producing declining or stagnant real wages. It is global, in the sense that it encompasses developed and developing countries.