Rising Food Prices and Household Welfare: Evidence from Brazil in 2008

44 Pages Posted: 23 May 2011

See all articles by Francisco H. G. Ferreira

Francisco H. G. Ferreira

World Bank - Development Research Group (DECRG)

Anna Fruttero

New York University (NYU) - Department of Economics

Phillippe G. Leite

World Bank - Research Department

Leonardo Lucchetti

World Bank

Multiple version iconThere are 2 versions of this paper

Abstract

Food price inflation in Brazil in the twelve months to June 2008 was 18 percent, while overall inflation was 5.3 percent. This paper uses spatially disaggregated monthly data on consumer prices and two different household surveys to 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 the 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.

Keywords: food prices, welfare, poverty, inequality, price change incidence curve, Brazil

JEL Classification: D31, I38, O15

Suggested Citation

Ferreira, Francisco H. G. and Fruttero, Anna and Leite, Phillippe G. and Lucchetti, Leonardo, Rising Food Prices and Household Welfare: Evidence from Brazil in 2008. IZA Discussion Paper No. 5713, Available at SSRN: https://ssrn.com/abstract=1849468

Francisco H. G. Ferreira (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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Anna Fruttero

New York University (NYU) - Department of Economics ( email )

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Phillippe G. Leite

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Leonardo Lucchetti

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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