How To Raise Prices For Essential Commodities for Low-Income Households

Posted on January 14, 2021 by Guy Atkinson

Living costs cover expenses required for one to live a reasonably comfortable life. It includes the expenses for food, shelter, clothing, and other basic necessities like a basic cell phone (you can get one from if you are deemed eligible). The concept of living costs is the equivalent of saying the price of doing things is the value of what it will bring compared to the amount someone pays for them. Price changes are usually operationalized on a cost-of -living index, which is updated each year.

Living cost interventions refer to changes that households make to accommodate higher prices of goods and services. Some of these interventions may be initiated by households or institutions, while others may be undertaken by government agencies or private organizations. The aim of interventions is to reduce the differential between areas at the same level of income that ultimately affect living costs. Intervention can take the form of raising the rates of taxation of higher priced goods in high-income neighborhoods to lessen the disparity between areas, or subsidizing housing in low-income neighborhoods to increase the accessibility of housing to lower-income families.

One of the major living costs adjustment is to raise the incomes of families with children. This can be done through macroeconomic policies such as raising the minimum wage and improving the unemployment rate or through social policies such as providing child-care assistance or universal child care. Raising the income of a family with children would lead to improvements in child-care infrastructure, including better day care and early childhood education, and raise the quality of employment for parents. However, some researchers believe that raising the incomes of families with children would have undesirable implications for employment markets.

The other main living costs adjustment involves changes in the distribution of national income or salaries among households. While raising minimum wage laws across states may raise aggregate demand in certain regions, the effect on employment within those states would be negative, as low-income households would leave the state to take advantage of the higher wages. Similarly, raising the unionization rate among households could reduce aggregate demand, since more households would be tied together and employed at lower wages.

The optimal way to increase living costs for poor households is through government interventions. The type of intervention needed is dependent upon the preferences of households. Some people favor increases in minimum wage laws across states, while others favor increases in the Earned Income Tax Credit or child care assistance programs. There are also individuals who prefer the use of fiscal stimulus packages to stimulate the economy, although these programs have many drawbacks such as hurting the economy through adverse monetary and credit impacts.

The types of interventions include direct and indirect government interventions. Direct interventions include raising the incomes of low-income households by raising the prices of essential goods. Indirect interventions include providing grants to low-income families to finance the necessary repairs and improvements to housing. Government purchases of essential goods can either purchase necessary commodities directly from producers or through wholesalers.

Indirect interventions include macroeconomic policies that ensure the maintenance of acceptable levels of unemployment, inflation, and stable interest rates across the country. Many economists recommend the use of fiscal stimulus packages to make local economies more stable. For instance, areas with high unemployment and low interest rates should be encouraged to adopt expansionary fiscal policies, such as increases in the minimum wage, that will reduce the incomes of poor households and increase overall employment levels in those areas. Likewise, areas with high inflation should be encouraged to adopt supply-side policies, such as reducing the taxes and fees on goods and services, so that the price of essential commodities rises above the costs associated with supply-side policies, such as trade wars.

The types of interventions available to raise prices for essential commodities are limited. However, the types of interventions that the government can undertake are diverse and effective. The government can increase wages and salaries for low-income households, create more affordable childcare options for families, and support research and development programs to develop childcare curriculums that are designed to prepare children for entry level jobs. Additionally, the government can provide direct financial transfers to low-income households to increase the availability of child care. All these measures will increase the incomes of low-income households, putting money in their hands, and thereby giving them increased access to other important needs.

Tip of the Day

Time management for Finance Professionals

time management


I’ve just re-read Richard Denny’s fantastic book ‘Selling to Win’, in which he mentions a time management technique that I learnt many, many years ago from an old boss of mine.


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