Governments globally are coming under immense pressure to cushion the blow of surging food and fuel prices. In Latin America, the response risks igniting a tinderbox.
From Mexico to Brazil, persistently high inflation is widening the gap between rich and poor in what is already the world¡¯s most unequal region. It¡¯s stoking political upheaval that could be a foretaste of what lies ahead as policymakers the world over struggle to meet demands to increase social spending.
Across Latin America, a burgeoning middle class is seeing its prospects eroded. For society¡¯s poorest, the latest wave of consumer price increases will be a full percentage point higher than for the richest, estimates by the Economic Commission for Latin America and the Caribbean show. One-third of the entire region is poised to meet the criteria for poverty, defined as those living on $1.90 a day.
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