As the cost-of-living crisis triggered and sustained by a persistently high inflation is hitting the low income groups disproportionately around the world, even the developed nations are experiencing its fallout. The United Kingdom is an example where, according to a study, the proportion of people dying before their time (under the age of 75) – premature deaths – is set to rise by nearly 6.5 per cent.

This alarming revelation published in the British Medical Journal translates into 30 extra deaths per 100,000 of the population annually. But the those in the most deprived households experiencing a rate four times that of the least deprived.

It means the crisis is set to “cut lives short” and “significantly widen the wealth-health gap” as the poorest having to spend a larger proportion of their income on the expensive energy.

Without any mitigation, the model found that inflation could increase deaths by 5pc in the least deprived areas and by 23pc in the most deprived – coming down to 2pc and 8pc with mitigation, with an overall rate of around 6.5pc. Overall life expectancy would also fall in each case, it added.

“Our analysis contributes to evidence that the economy matters for population health,” said the researchers. “The mortality impacts of inflation and real-terms income reduction are likely to be large and negative, with marked inequalities in how these are experienced.

“Implemented public policy responses are not sufficient to protect health and prevent widening inequalities,” they added.
UK inflation unexpectedly slowed in August to 6.7pc from a high of 11.1pc, but remains the highest in the G7, fuelled by coronavirus lockdowns, Brexit and the war in Ukraine – a scenario not seen since 1970s.

The researchers modelled three scenarios: without any mitigating measures, (2) with the inclusion of the EPG; and (3) with the inclusion of the Energy Price Guarantee (EPG) + Cost of Living Support payments. These were compared against ‘business as usual’ (average inflation from previous years) to estimate the health effects of each one.

Explaining the impacts of rising cost of living, the study says, “Our analysis contributes to evidence that the economy matters for population health. Evidence suggests that since 2012, economic conditions in the UK have caused a stalling of life expectancy and widened health inequalities, as austerity led to weaker social security and reduced income for the poorest households.”

“The mortality impacts of inflation and real-terms income reduction are likely to be large and negative, with marked inequalities in how these are experienced. Implemented public policy responses are not sufficient to protect health and prevent widening inequalities.”

Your buying habits and priorities depend upon your income. You may like Gucci or Ralph Lauren products, but it is your income and purchasing power which determine what you will buy or not.

The prevailing cost-of-living crisis fuelled by inflation is making the people – especially those from low income groups and middle class – to change their priorities not withstanding what they like or dislike. With most of the money spent on food and energy needs, an overwhelming majority has is very little spend on other items. You can observe it easily in Pakistan.

Meanwhile, many don’t have money to eat enough as they are opting to eat less while some completely removing items like milk, eggs and meat from their grocery lists.

With no increase in income or reduction in prices in sight, the only solution they have is to adjust their needs and find less expensive alternatives.

However, the reduced purchasing power is itself causing or complicating other problems. The less they spend, the fewer consumer goods are sold. It means reduced domestic demand that hurts the industries badly.

So the existing businesses aren’t expanding and the new ones not established, which means fewer or no employment opportunities besides the negative effects on revenue collection by the government. It’s a vicious circle for everyone, but more clearly visible in countries like Pakistan.

An example of change in buying habits amid the rising cost of living has emerged from France where, according to Reuters, French consumers are buying fewer personal hygiene and household products, sacrificing tampons and laundry detergent as prices of products made by big brands like P&G and Unilever surge.

The shift in shoppers’ habits could create a new battleground for retailers, politicians and consumer goods makers that have for months been fighting over food prices.

The data, compiled by NielsenIQ, showed overall sales volumes for shower gel, tampons, dishwashing products, laundry detergent and toilet paper declined in the year ended Sept 17. Supermarket prices for items in each of these categories were sharply higher so far this month versus the same period last year.

“Where there are good private label alternatives you see a big shift towards private labels,” said Anton Delbarre, chief economist at retail trade group Eurocommerce.

“And what you also see is some people actually do eat less, shower less, clean the house less, or they use a little less product for their dishwasher or their washing machine.”

President Emmanuel Macron’s government is due to address grocery inflation in its budget on Wednesday, with legislation to bring forward annual negotiations between food producers and supermarkets. It hopes price cuts can then take effect from Jan 15 rather than March 1 as usual.

Food makers like Nestle and Pepsico have been criticised by supermarkets and politicians for not “co-operating” in pricing negotiations, and for reducing pack sizes of products.

Carrefour, which has pricing power as France’s No 2 supermarket operator, last week slapped “shrinkflation” labels on products that are getting smaller with no price cuts.

Major brands like Ariel laundry detergent and Dove soaps have for years dominated the market versus retailers’ private label goods.

But the NielsenIQ data shows volumes for private label personal products are inching up while those for big brands decline. For instance, shower gel volumes fell 6 per cent overall and 10pc for big brands but rose 14pc for private label products.

Similarly, while laundry detergent volumes were down about 2pc across the category and fell 10pc for big brands, they surged 28pc for private label brands.

Where people bought less shower gel, tampons, dishwashing products, laundry detergent and toilet paper made by big brands in the year to Sept 17, they bought more of each type of product made by retailers’ private label brands.

While grocers and the government have been vocal about their frustrations in the media and at hearings with lawmakers, consumer goods companies have largely kept quiet, leaving trade groups to speak on their behalf. Unilever declined to comment and P&G did not respond to a request for comment for this story.

“Consumer goods volumes are weak because of the weak economy in France,” said Bernstein analyst Bruno Monteyne.

Carrefour CEO Alexandre Bompard warned in August that high prices had forced consumers to make massive cuts to spending on essential goods.

Bompard, who has for months slashed prices to win shoppers away from rivals, said then that Carrefour was free to sell washing powder at a 60% discount, but would not be able to do so after a cap on the promotions retailers can offer becomes law.

He said the change would limit Carrefour’s bargaining power with large suppliers like Procter & Gamble, Henkel and Unilever.

Delbarre at Eurocommerce said some of the change in what shoppers buy was likely to persist even after the cost-of-living squeeze eases.

“People are actually rationing, in part because of decreased purchasing power, and also because salaries always lag behind inflation,” he said. “Once salaries catch up to inflation that effect should probably diminish, but some of it will remain because people create new habits.”
 

Asian shares mostly sank Tuesday over worries about a possible U.S. government shutdown and the troubled Chinese economy.

Japan’s benchmark Nikkei 225 index slipped 0.6% in morning trading to 32,469.85. Australia’s S&P/ASX 200 dipped 0.5% to 7,042.50. South Korea’s Kospi dropped nearly 1.0% to 2,471.30. Hong Kong’s Hang Seng shed 0.9% to 17,578.90, while the Shanghai Composite fell 0.2% to 3,110.86.

Investors are watching for Chinese economic indicators being released later in the week.

“The Chinese property woes are far from over, as the notorious developer Evergrande defaulted on its 4 billion yuan onshore bond repayment and delayed the restructuring meetings,” said Tina Teng, market analyst at CMC Markets APAC & Canada.

Wall Street clawed back some of its steep losses from last week. The S&P 500 rose 17.38, or 0.4%, to 4,337.44, coming off its worst week in six months. The Dow Jones Industrial Average edged up 43.04, or 0.1%, to 34,006.88, and the Nasdaq composite gained 59.51, or 0.5%, to 13,271.32.

Realization is sinking in that the Federal Reserve will likely keep interest rates high well into next year. The Fed is trying to ensure high inflation gets back down to its target, and it said last week it will likely cut interest rates in 2024 by less than earlier expected. Its main interest rate is at its highest level since 2001.

The growing understanding that rates will stay higher for longer has pushed yields in the bond market up to their highest levels in more than a decade. That in turn makes investors less willing to pay high prices for all kinds of investments, particularly those seen as the most expensive or making their owners wait the longest for big growth.

The yield on the 10-year Treasury rose to 4.53% from 4.44% late Friday and is near its highest level since 2007. That’s up sharply from about 3.50% in May and from 0.50% about three years ago.

“Stocks digest gradual, growth driven increases in interest rates far better than rapid increases driven by other factors such as inflation or Fed policy,” Goldman Sachs strategists led by David Kostin wrote in a report.

Higher yields are at the head of a long line of concerns weighing on Wall Street. Not only have oil prices jumped by $20 per barrel since June, economies around the world are looking shaky. The resumption of U.S. student-loan repayments may also weaken what’s been the U.S. economy’s greatest strength, spending by households.

In the near term, the U.S. government may be set for another shutdown amid more political squabbles on Capitol Hill. But Wall Street has managed its way through previous shutdowns, and “history shows that past ones haven’t had much of an impact on the market,” according to Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.

On Wall Street, Amazon rose 1.7% and was the strongest single force pushing up on the S&P 500. The company announced an investment of up to $4 billion in Anthropic, as it takes a minority stake in the artificial intelligence startup. It’s the latest Big Tech company to pour money into AI in the race to profit from opportunities that the latest generation of the technology is set to fuel.

Stocks of media and entertainment companies were mixed after unionized screenwriters reached a tentative deal on Sunday to end their historic strike. No deal yet exists for striking actors.

Netflix rose 1.3%, while The Walt Disney Co. slipped 0.3%. Warner Brothers Discovery dropped 4% for the day’s largest loss in the S&P 500.

Also on the losing end of Wall Street were stocks of travel-related companies, which slumped under the weight of worries about higher fuel costs. Southwest Airlines sank 2% and Norwegian Cruise Line fell 3.1%.

In energy trading, benchmark U.S. crude slipped 7 cents to $89.61 a barrel. Brent crude, the international standard, fell 14 cents to $93.15 a barrel. On Wall Street, Exxon Mobil rose 1.1% and ConocoPhillips gained 1.6%. Oil prices have leaped sharply since the early summer.

In currency trading, the U.S. dollar rose to 148.93 Japanese yen from 148.84 yen. The euro cost $1.0586, down from $1.0594.