Box 3: The erosion of living standards for households with children in the EU due to the cost-of-living crisis An analysis conducted by UNICEF Innocenti sought to understand how the cost-of-living crisis in the EU in late 2022 might have affected the real economic experiences of households with children. It used existing data to project how households’ standard of living might be reduced by rapidly increasing food and energy prices without increases in income. This situation meant that many additional households with children could fall below the effective poverty threshold in real terms, based on their spending power. → The analysis estimated that over 4 million additional children were at risk of experiencing poverty in real terms due to the cost-of-living crisis (Figure 18). → The analysis also modelled the effect of government actions to reduce the burden on households through lump sum payments. It also estimated that these actions may have effectively removed the poverty risk for 1.3 million children in the EU. Figure 18. The potential impact of the cost-of-living crisis in the EU up to December 2022 Sources: See Technical Appendix 25.0 Children at risk of experiencing poverty (millions) 19.4 20.0 16.9 17.7 18.1 15.2 15.0 10.0 5.0 0.0 Baseline 32 Effect due to food inflation Child Poverty in the Midst of Wealth Effect due to Effect due to Mitigating effect energy inflation food and energy due to the inflation subsidies Innocenti Report Card 18