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Climate Change Affects The Purchasing Power of Consumers

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“FAO Strategy on Climate Change. Rome, July 2017. Climate change compromises food access by affecting the purchasing power of consumers, especially the poor.”

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Food security and access to (healthy) food, according to the FAO – World Agriculture: Towards 2015/2030, currently relies rather upon socio-economic conditions than  agroclimatic ones, whereby the effects of climate change on food security are complex in terms of assessing its in/direct impacts on food security. Furthermore, according to FAO, does food security rely more upon PESTLE factors in societies across the world, including poverty reduction, women´s education and quality of drinking water.

What impacts the purchasing power of consumers, in general? Simply stated, inflation has a major influence upon the purchasing power of consumers. In economy, what matters is not necessarily the amount of money available, but what the purchasing value is of that currency in the (world) economy. The higher the inflation, the lower the value of a currency, and the more actual currency is needed to purchase something, e.g. food. If inflation is high, and e.g. food prices simultaneously rise, it is a natural consequence that consumers will need more currency to buy a product. And, if there is not enough currency available (what concerns especially majority of poor people worldwide), there is also no possibility of buying a certain product. High taxation on food products, and a small amount of population (limited market), and a lack of competition on a market also affect food prices. If, e.g. only one company has a monopoly on a specific market, it will have the competitive advantage of setting the prices, while on competitive markets with a number of providers prices tend to be lower thanks to a healthy amount of competition.

Moreover, if and when resources are scarce (added to low purchasing power), prices tend to rise, whereby those with low income have no possibility of purchasing products above a certain price limit, unless income/wages simultaneously go up equally much to support the purchasing power of consumers. In developed economies therefore, inflation generally tends to be at very low and stable levels, while factors such as a low rate of development, wars, and other major PESTLE factors influencing an economy, such as general instability, corruption etc. tend to raise inflation to sometimes almost incomprehensible numbers.

Watch United Nations video “Hunger is there because people do not have the purchasing power” (Olivier De Schutter):

 

 

Connect with me on Twitter @annemariayritys – for climate-related posts only @GCCThinkActTank & subscribe to my newsletter at Leading With Passion

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