The rising price of food is hitting the poorest people hardest. According to the U.S. Department of Agriculture, food prices will increase by 7% in the next year. This will be especially hard on low-income families, who spend a quarter of their annual income on food. The price increase has led to increased prices of chicken, fish and eggs.
In advanced economies, food accounts for 17% of spending, but this number more than doubles in sub-Saharan regions. Moreover, there is a lack of rainfall in several regions of Africa, which is making droughts more frequent. In addition, the continent is becoming more prone to sea level rise. In Ethiopia, for example, two years of drought have resulted in widespread hunger. The United States Agency for International Development (USAID) estimates that 8 million Ethiopians require food assistance.
Food banks help to provide food to struggling families. However, due to the high cost of food, many of these organizations are finding it difficult to meet the demands of their clients. In fact, 85% of the 200 food banks in the Feeding America network reported an increase in demand for food assistance in February.
The cost of groceries is rising faster than the cost of home energy, which accounts for a large percentage of a low-income family’s net income. The rising costs also affect the price of textbooks, car insurance, rent and beef. As a result, many low-income families have no financial cushion to absorb these increases. In addition, many of these families own cars, which increase their spending on necessities such as food.
According to a study by the FAO, rising food prices are increasing food costs for households in low-income groups, which has been a major concern for food producers in developing countries. The researchers used household survey data and other variables to estimate the impacts of higher prices. This research found that households in low-income countries with less land had higher costs of food.
Rising food prices have a significant impact on the health and well-being of poor households. For these households, it is increasingly difficult to purchase basic food baskets, which is essential for their survival. In addition to this, the rising price of food hinders the purchase of other necessities. Moreover, many poor households are forced to rely on cheaper products and less nutritious ones.
While the overall rate of inflation in South Africa was 5,9% in March 2022, the rate of increase in food and non-alcoholic drinks was higher at 6,2% respectively. The rates of increase in these two items were similar in February 2021 and February 2022. As such, these two statistics make food costs even more difficult for low-income families and make them even poorer.
Despite the fact that rising food prices are hitting low-income groups, the federal government can still help alleviate the hardship on these families by enacting an expansion of the monthly Child Tax Credit. This credit would be fully refundable.