The root cause of the quickly-rising cost of living in Western countries is rising energy costs.
It was the energy minister of the UAE who shone a light on the problem earlier this week. Speaking to CNBC at the World Government Summit in Dubai, Suhail al Mazrouei said that politicians are focusing too much on geopolitics and ignoring the issue of energy affordability, which is affecting both developed and developing economies.
If they continue to ignore this issue, he said, politicians risk seeing large parts of the world plunged into energy poverty, which would, in turn, lead to economic slowdown for much of the world and global stagnation.
More households at risk of energy poverty
In November last year, for instance, six in ten Britons said they had seen an increase in their cost of living. This month, this has risen to eight out of ten as energy costs continue higher.
In Germany, inflation is seen accelerating to 6.1 percent this month, from 5.1 percent in February, according to the Ifo Institute. Soaring energy costs are at the root of this inflation trend…
In France, the rising cost of living has boosted the election chances of far-right candidate Marine Le Pen, who is betting strongly on messaging that addresses the purchasing power concerns of French citizens who, like their fellow EU-members in Germany and Britons in newly “exited” UK, have been struggling with rising costs of living.
In the United States, the Fed is preparing for an aggressive push into rate hikes to rein in inflation, which has led several economists, among them Mohamed El-Erian, to warn that such an aggressive step could lead to a cost-of-living crisis. Meanwhile, the White House has announced yet another release of oil from the strategic petroleum reserve in an attempt to cool prices at the pump.
Politicians on both sides of the Atlantic are happily blaming everything on Russia’s President Vladimir Putin
However, sooner or later, the dust will settle, and people will start asking why even though the war is over, energy is still more expensive than it was before. That would be one tough question to answer unless those who may have to answer it heed the warning made by the UAE’s Al Mazrouei.
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