Publication: Rising Food Prices and Household Welfare : Evidence from Brazil in 2008
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Date
2011-05-01
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Published
2011-05-01
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Abstract
Food price inflation in Brazil in the twelve months to June 2008 was 18 percent, while overall inflation was seven percent. Using spatially disaggregated monthly data on consumer prices and two different household surveys, we estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage-earning agricultural labor force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. While the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, the market income effect was positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U-shaped, with middle-income groups suffering larger proportional losses than the very poor. Nevertheless, since Brazil is 80 percent urban, higher food prices still led to a greater incidence and depth of poverty at the national level.
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“Fruttero, Anna; Ferreira, Francisco H.G.; Leite, Phillippe; Lucchetti, Leonardo. 2011. Rising Food Prices and Household Welfare : Evidence from Brazil in 2008. Policy Research Working Paper ; No. 5652. © http://hdl.handle.net/10986/3581 License: CC BY 3.0 IGO.”
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