--- description: Despite falling inflation, high costs are fueling a global affordability crisis and political backlash in 2026. title: The Global Affordability Crisis Isn't Going Away image: https://static.time.com/v3/assets/bltea6093859af6183b/bltd11d759ddc3333d0/6998ccd8c8dcb48467b50c9a/260105punchbag_v1.jpg?branch=production&width=3840&quality=75&auto=webp&crop=16:9 --- Jan 15, 2026 # The Global Affordability Crisis Isn’t Going Away by [Neale Mahoney](/author/neale-mahoney/) and [Adam Shaw](/author/adam-shaw/)  Illustration by Chris Gash for TIME In the U.S., home prices have shot up about 45% since 2020, more than twice the typical rate of appreciation. In the U.K., household energy bills are 52% higher than their prepandemic level. And in countries such as Nigeria, Pakistan, and Haiti, food prices have doubled over the same period. Call it the global affordability squeeze: [people around the world](https://time.com/7341644/humanitarian-aid-global-crisis-2025/ "undefined") are facing the impact of high prices, and they’re not happy about it. This concern shows up clearly in polling data. In the U.S., cost-of-living issues consistently rank highest among problems facing the country, ahead of issues like crime and [immigration](https://time.com/7341833/no-sleep-for-ice-protests-hotels/ "undefined"). The pattern is similar in Europe, where rising prices and the cost of living eclipse concerns about defense and security. High prices have also been a flash point in the developing world, helping fuel protests from Indonesia to Peru—and even contributing to the collapse of the governments of Nepal and Madagascar. The sources of strain differ across [regions](https://time.com/7343161/conflict-doha-un-peace-broker-mediation/ "undefined"). In advanced economies, housing costs are the main driver of unaffordability, while in much of the developing world, food prices are the biggest pressure. In the U.S., [health care](https://time.com/7342307/americas-health-care-system-broke-2025/ "undefined") expenses often rival housing as the top burden. In Europe, energy prices remain high after the post-Ukraine surge. And across rapidly growing cities in Asia and Africa, transportation costs squeeze middle-class families as urbanization outpaces the build-out of roads and public transit. However, the high salience of cost-of-living issues puzzles some economists. Global inflation has fallen sharply from its 2022–2023 peak. In many countries, wages are now rising faster than prices. Yet polling and protests make it clear that a sense of being squeezed by high prices has barely budged. So why are we still in the grips of a global affordability squeeze? There are several explanations for the disconnect between improving purchasing power and ongoing angst about costs. Inflation may have raised the salience of affordability in a way that persists: once you see high prices, it’s hard to unsee them. Consumers might notice the high absolute price levels while disregarding corresponding wage gains. Research shows that to many workers, a raise feels earned, while a higher price feels imposed. In addition, today’s media environment might amplify nonrepresentative price spikes—like high beef and egg prices—reinforcing the perception that “everything is getting more expensive” even when overall inflation is down. The political fallout of cost-of-living issues shows no signs of stopping. In 2024, incumbent parties were often dismissed by voters frustrated with high prices. In 2025, [Zohran Mamdani’s rise](https://time.com/7342810/mamdani-swearing-in-ceremony-nyc-mayor/ "undefined") from relative obscurity to win the New York City mayoral race was predicated on a platform largely focused on cost-of-living issues. Heading into 2026, incumbents should be on high alert: unless they address voters’ concerns, many will find themselves shown the door. So what can leaders do about affordability? First, they must do no harm. In the U.S., President [Donald Trump](https://time.com/7306868/trump-tariffs-tracker-countries-rates-sectors-trade-deals-deadlines-timeline/ "undefined") ramped up tariffs despite warnings and then evidence of their inflationary effects. His Administration has also slowed or blocked wind and solar projects that could have expanded electricity supply. Trump also signed a budget bill that is predicted to more than double average health-insurance premiums for 22 million Americans. Republicans then saw major setbacks in 2025 elections. Now the White House is backtracking by rolling back some tariffs. Taking proactive steps to tackle affordability is hard but necessary. The most effective way to lower prices is to [expand supply—build more housing, add new energy capacity](https://time.com/7313848/trump-bessent-national-housing-emergency-declaration-affordability-crisis-explainer/ "undefined"), and modernize infrastructure. Robust competition policy, including antitrust enforcement, can also put downward pressure on prices. But expanding supply and enhancing competition takes years—and voters feel the affordability pinch today. Demand-side support helps in sectors such as health care and childcare. But for goods whose supply is less elastic—such as housing and [energy](https://time.com/7339625/clean-energy-boom-2025/ "undefined")—putting more money in consumers’ pockets risks pushing prices even higher. Price controls are gaining popularity, as witnessed by Mamdani’s campaign promise to freeze the rent and the U.K. government’s announced freeze of rail fares. These methods can provide some short-term relief when they are targeted and temporary, but risk suppressing the very investment needed to expand supply if they become broader and persistent. The danger is that, facing limited options to directly tackle cost-of-living concerns, politicians may reach for demagoguery instead. Around the world, leaders have deflected responsibility by blaming [immigrants](https://time.com/7325641/pope-leo-immigrants-migrants-chicago-trump/ "undefined"), corporate executives, or political rivals, straining already fragile social fabrics and deepening political polarization. The future of affordability is uncertain. A global slowdown could replace high prices with unemployment as voters’ top concern. Absent such a slowdown, affordability pressures will persist, weighing on incumbents and tempting leaders toward scapegoating. The harder—and more hopeful—path is the slow work of expanding supply, enhancing competition, and carefully designing demand-side support that won’t backfire. One way or another, look for affordability to dominate [the economic and political conversations as we head into 2026](https://time.com/7343169/top-10-global-risks-2026/ "undefined"). 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