IMF warns tax cuts vs inflation could be costly

The International Monetary Fund (IMF) has warned that soaring food and energy prices are raising the risk of social unrest, but attempting to tame costs through tax cuts, subsidies, and price controls will be too costly. The IMF issued the warning after food prices have surged by 50% since 2019, while energy bills have soared in the wake of Russia's invasion of Ukraine. Vitor Gaspar, director of IMF's fiscal affairs department, said that countries all around the world are facing more pressing and painful trade-offs. He said that the combination of inflation along with food and energy price surges point to a cost-of-living crisis. When the global economy was hit by multiple shocks in the past year, countries spent heavily to protect their economies during the pandemic, then faced supply chain issues as they emerged from COVID lockdowns.