According to the International Labour Organisation (ILO), Covid-19 pandemic, along with the associated lockdowns, mobility restrictions and physical distancing rules, has not only led to a significant increase in unemployment and considerable income losses for many people, but has also altered the spending patterns of consumers and the level of price inflation that they face.
In particular, the lockdown measures have affected the supply of and demand for certain products and, hence, their prices, said a press release.
Demand for many non‑essential goods and services has plummeted since the beginning of the pandemic, an increasing number of people have lost their jobs or been obliged to work fewer hours thereby experiencing a drop in their income.
The initially very sharp fall in demand led to a decrease in the prices of some items, such as fuel, in the "basket" of goods and services used to calculate the consumer price index (CPI). As a result, consumer price inflation slowed down at the global level from about 4% in the first quarter of 2020 to about 2.5% in the second quarter.
As lockdown measures were subsequently eased, consumer price inflation picked up slightly but still remained below the pre‑pandemic level. In August 2020, the prices of all goods and services were on average 2.7% higher than in August 2019.
Owing to Covid-19-related supply disruptions and the strong demand from consumers stockpiling food and medical supplies, but also personal care products, cleaning products and toilet paper, the prices of these goods have increased substantially.
Increases in food prices can have a major impact on the living standards of lower‑income households, which generally spend most of their income on food. Even a small increase can confront the members of such households with difficult decisions. Rising food prices and job losses triggered by the Covid-19 pandemic have the potential to undermine progress towards the Sustainable Development Goals and could even spark social unrest.