In a report, it said that a main cause was the continuing Israeli blockade.
The report comes six months after the end of Israel's military offensive in Gaza in which at least 1,100 Palestinians died.
Israel said the offensive was aimed at curbing rocket attacks into southern Israel by Palestinian militants.
The Red Cross says that the people of Gaza are unable to rebuild their lives and are sliding ever deeper into despair.
There is not the cement or steel to reconstruct neighbourhoods hit by Israeli strikes.
Seriously ill patients are not receiving the treatment they need. The water supply is patchy, sanitation on the point of collapse.
The ICRC statement comes as a UN Human Rights Council inquiry into alleged war crimes in Gaza and southern Israel holds public hearings in Gaza City.
South African judge Richard Goldstone's inquiry is holding two days of hearings in Gaza and will take testimony in Geneva in July.
Israel has refused to allow the investigators onto its territory and has accused the mission of bias against it.
Worst affected
Poverty in Gaza is at what the Red Cross calls an "alarming" level.
"The poorest residents in particular have exhausted their coping mechanisms and often have to sell off their belongings to be able to buy enough to eat," said Antoine Grand, head of the ICRC's sub-delegation in Gaza.
"Worst affected are the children, who make up more than half of Gaza's population," he added.
The Red Cross says the crisis is directly linked to Israel's tight closure of the crossing points into Gaza after the Islamist Hamas movement took power there two years ago.
The Israeli prime minister's spokesman told the BBC that Hamas is primarily responsible for the hardship of Gaza's civilian population.
And he said the idea that, should building materials be allowed in, Hamas would not siphon them off for what he called its military machine was simply not credible.
Donors who have pledged $4.5 billion for reconstruction and rehabilitation in Gaza following the 22-day offensive which left more than 50,000 homes, 800 industrial properties and 200 schools damaged or destroyed, as well as 39 mosques and two churches.
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