IMF urges governments to focus aid on low-income households during price spikes

A recent IMF analysis stresses that cost-of-living crises disproportionately affect poorer families, eroding their ability to afford basic necessities. The fund’s chapter in the World Economic Outlook calls for targeted, temporary aid delivered through existing social-protection programmes, arguing this approach is more efficient than universal policies like tax reductions or price controls. It highlights that even brief spikes in food, energy and transport costs can have lasting effects on low-income households, citing the aftermath of Russia’s invasion of Ukraine and recent Middle-East conflicts.

While broad measures may be appropriate in “exceptional circumstances” such as looming food insecurity or social unrest, the default response should focus on the most vulnerable. The IMF plans to release the full outlook report next week.