Inflation

Defined as a continuous rise in the general price level, inflation significantly contributes to the inability to eradicate poverty, and particularly extreme poverty, in the world. Its contribution to poverty can be directly seen in the rising costs related to maintaining a basic standard of living and in its influence on the labor market and wages. Inflation indirectly influences poverty because of pursuant contractionary fiscal and monetary policies. Inflation also affects social welfare provisions when they are not indexed to inflation.

Inflation affects the poor more than the rich. This is especially true in terms of food, energy, and housing inflation. In fact, a number of studies on inflation and poverty in developing countries have shown the effect of inflation on the poor. Its influence, however, ...