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Rising food prices and household welfare : evidence from Brazil in 2008


  • Ferreira, Francisco H. G.
  • Fruttero, Anna
  • Leite, Phillippe
  • Lucchetti, Leonardo


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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  • Ferreira, Francisco H. G. & Fruttero, Anna & Leite, Phillippe & Lucchetti, Leonardo, 2011. "Rising food prices and household welfare : evidence from Brazil in 2008," Policy Research Working Paper Series 5652, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5652

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    1. Fabio Veras Soares & Sergei Suarez Dillon Soares & Marcelo Medeiros & Rafael Guerreiro Osório, 2006. "Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty," Working Papers 21, International Policy Centre for Inclusive Growth.
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    3. Jed Friedman & James Levinsohn, 2002. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology," World Bank Economic Review, World Bank Group, vol. 16(3), pages 397-423, December.
    4. Ferreira, Francisco H.G. & Leite, Phillippe G. & Ravallion, Martin, 2010. "Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985-2004," Journal of Development Economics, Elsevier, vol. 93(1), pages 20-36, September.
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    6. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    7. Anton Korinek & Johan Mistiaen & Martin Ravallion, 2006. "Survey nonresponse and the distribution of income," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 33-55, April.
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    Cited by:

    1. Kane Gilles Quentin & Tene Gwladys Laure Mabah & Ambagna Jean Joël & Piot-Lepetit Isabelle & Sikod Fondo, 2015. "The Impact of Food Price Volatility on Consumer Welfare in Cameroon," WIDER Working Paper Series 013, World Institute for Development Economic Research (UNU-WIDER).
    2. Rita Motzigkeit Gonzalez, 2016. "Welfare effects of changed prices The “Tortilla Crisis" revisited," Working Papers 167, Bavarian Graduate Program in Economics (BGPE).
    3. Elleby, Christian, 2014. "Poverty and Price Transmission," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182722, European Association of Agricultural Economists.
    4. Brambilla, Irene & Porto, Guido, 2016. "Trade, Poverty Eradication, and the Sustainable Development Goals," ADBI Working Papers 629, Asian Development Bank Institute.
    5. Mueller, Bernardo & Mueller, Charles C., 2012. "The Impact Of The 2007?08 Food Price Crisis In A Major Commodity Exporter : Food Prices, Inflation, And Inclusion In Brazil," WIDER Working Paper Series 095, World Institute for Development Economic Research (UNU-WIDER).
    6. Khandker, Shahidur R. & Koolwal, Gayatri B. & Haughtonm Jonathan & Jitsuchon, Somchai, 2012. "Household coping and response to government stimulus in an economic crisis : evidence from Thailand," Policy Research Working Paper Series 6016, The World Bank.
    7. Daniel Lederman & Guido Porto, 2016. "The Price Is Not Always Right: On the Impacts of Commodity Prices on Households (and Countries)," World Bank Research Observer, World Bank Group, vol. 31(1), pages 168-197.
    8. Alderman, Harold, 2014. "Can transfer programs be made more nutrition sensitive?:," IFPRI discussion papers 1342, International Food Policy Research Institute (IFPRI).
    9. Kostakis, Ioannis, 2. "The Determinants Of Households’ Food Consumption In Greece," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(2).
    10. Sakai, Yoko & Estudillo, Jonna P. & Fuwa, Nobuhiko & Higuchi, Yuki & Sawada, Yasuyuki, 2012. "Do Natural Disasters Affect the Poor Disproportionately? The Case of Typhoon Milenyo in the Rural Philippines," PRIMCED Discussion Paper Series 31, Institute of Economic Research, Hitotsubashi University.
    11. Xiaohua Yu & Satoru Shimokawa, 2016. "Nutritional impacts of rising food prices in African countries: a review," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(5), pages 985-997, October.
    12. repec:fpr:export:1342 is not listed on IDEAS
    13. Gohar, Abdelaziz A. & Cashman, Adrian, 2016. "A methodology to assess the impact of climate variability and change on water resources, food security and economic welfare," Agricultural Systems, Elsevier, vol. 147(C), pages 51-64.
    14. Tschirley, David & Myers, Robert & Zavale, Helder, 2014. "MSU/FSG Study of the Impact of WFP Local and Regional Food Aid Procurement on Markets, Households, and Food Value Chains," Food Security International Development Working Papers 184835, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    15. Yu, Xiaohua, 2014. "Monetary easing policy and long-run food prices: Evidence from China," Economic Modelling, Elsevier, vol. 40(C), pages 175-183.
    16. Sakai, Yoko & Estudillo, Jonna P. & Fuwa, Nobuhiko & Higuchi, Yuki & Sawada, Yasuyuki, 2017. "Do Natural Disasters Affect the Poor Disproportionately? Price Change and Welfare Impact in the Aftermath of Typhoon Milenyo in the Rural Philippines," World Development, Elsevier, vol. 94(C), pages 16-26.
    17. Musyoka, MP & Kavoi, Mutuku Muendo & Omiti, JM, 2014. "Food consumption patterns and distributional welfare impact of import tariff reduction on cereals in Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 9(3), August.

    More about this item


    Rural Poverty Reduction; Markets and Market Access; Food&Beverage Industry; Regional Economic Development;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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