The Impact of Food Inflation on Urban Poverty and Its Monetary Cost : Some Back-of-the-Envelope Calculations

This paper uses a sample of 73 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices. This cost is approximated by the change in the poverty deficit, that is, the variation in financial resources required to eliminate poverty under perfect targeting. The results show that, for most countries, the cost represents less than 0.1 percent of gross domestic product. However, in the most severely affected, it may exceed 3 percent. In all countries, the change in the poverty deficit is mostly due to the negative real income effect of those households that were poor before the price shock, while the cost attributable to new households falling into poverty is negligible. Thus, in countries where transfer mechanisms with effective targeting already exist, the most cost-effective strategy would be to scale up such programs rather than designing tools to identify the new poor.

Bibliographic Details

Main Authors:	Dessus, Sébastien, Herrera, Santiago, de Hoyos, Rafael
Language:	English
Published:	World Bank, Washington, DC 2008-07
Subjects:	ACCOUNTING, AGRICULTURAL ACTIVITIES, AGRICULTURAL YIELDS, AGRICULTURE, BANK POLICY, BULLETIN, CASH TRANSFERS, CHANGES IN POVERTY, CLIMATE CHANGE, COMMODITY PRICE, COMMODITY PRICES, CONSUMER PRICE INDEX, CONSUMPTION BASKET, DEFICITS, DERIVATIVE, DEVELOPING COUNTRIES, DEVELOPMENT POLICY, DOMESTIC MARKETS, DOMESTIC PRICES, ECONOMIC DEVELOPMENT, EXCHANGE RATES, EXPENDITURE, EXTREME POVERTY, EXTREME POVERTY LINE, FARMERS, FINANCIAL CRISIS, FOOD CONSUMPTION, FOOD CONSUMPTION PATTERNS, FOOD DEMAND, FOOD ITEMS, FOOD PRICE, FOOD PRICE INFLATION, FOOD PRICES, FOOD SHARE, FOOD-FOR-WORK, GROSS DOMESTIC PRODUCT, HOUSEHOLD BUDGET, HOUSEHOLD INCOME, HOUSEHOLD INCOMES, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WELFARE, HUMAN DEVELOPMENT, IMPACT ON POVERTY, INCIDENCE OF POVERTY, INCOME, INCOME DISTRIBUTION, INCOME LEVEL, INCOME LEVELS, INTERNATIONAL BANK, INTERNATIONAL MARKETS, INTERNATIONAL TRADE, MARKET PRICES, MARKET STRUCTURES, MEASUREMENT OF POVERTY, MILLENNIUM DEVELOPMENT GOAL, NEW POOR, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POLICY RESPONSE, POOR, POOR HOUSEHOLDS, POVERTY ALLEVIATION, POVERTY GAP, POVERTY IMPACT, POVERTY LEVELS, POVERTY LINE, POVERTY LINES, POVERTY POVERTY, POVERTY RATE, POVERTY RATES, POVERTY THRESHOLD, PRICE CHANGE, PRICE CHANGES, PROGRESS, PURCHASING POWER, RESPECT, RURAL, RURAL AREAS, RURAL HOUSEHOLDS, RURAL POPULATION, RURAL POVERTY, RURAL WELFARE, SOCIAL UNREST, TARGETED TRANSFER PROGRAMS, TARGETING, TARGETING MECHANISMS, URBAN AREAS, URBAN POPULATION, URBAN POVERTY, VULNERABLE HOUSEHOLDS,
Online Access:	http://documents.worldbank.org/curated/en/2008/07/9670245/impact-food-inflation-urban-poverty-monetary-cost-some-back-of-the-envelope-calculations https://hdl.handle.net/10986/6849
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