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Impact of increases in food prices on consumer welfare in Lesotho

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  • Prifti, Ervin
  • Daidone, Silvio
  • Miguelez, Borja

Abstract

During 2015 and 2016, Lesotho experienced a large increase in the price of cereals, the main staple food in the country. This has led to an erosion of purchasing power and to a decrease in the consumption of staple foods. For the study, we used a demand system to simulate the effects of an increase in the price of staple foods. We based our analysis on data collected for the evaluation of the Child Grants Programme, which offers unconditional cash transfers to poor households with orphans and vulnerable children. We estimated the necessary increase in total income that is needed to counter the impacts of the current price hike and to maintain households’ utility unchanged. In particular, every percentage increase in the price of cereals would need to be matched by a 0.4% increase in income. As for the possible policy measures, we suggest the country’s social protection system as the source for the extra income.

Suggested Citation

  • Prifti, Ervin & Daidone, Silvio & Miguelez, Borja, 2017. "Impact of increases in food prices on consumer welfare in Lesotho," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 12(1), March.
    • Handle: RePEc:ags:afjare:258599
    DOI: 10.22004/ag.econ.258599
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    Cited by:

    1. G. Mukwada & S. J. Taylor & D. Manatsa & P. Mahasa & G. Robinson, 2020. "Combating food insecurity in a rapidly changing mountain climate environment: insights from Lesotho," Climatic Change, Springer, vol. 163(2), pages 989-1006, November.
    2. Dietrich, Stephan & Schmerzeck, Georg, 2020. "For real? Income and non-income effects of cash transfers on the demand for food," MERIT Working Papers 2020-006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Krah, Kwabena, 2022. "Maize price variability, land use change, and forestloss: evidence from Ghana," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322247, Agricultural and Applied Economics Association.

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