Impact of increases in food prices on consumer welfare in Lesotho

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.


Issue Date:
Mar 01 2017
Publication Type:
Journal Article
ISSN:
1993-3738
Language:
English
Published in:
African Journal of Agricultural and Resource Economics, Volume 12, Number 1
Page range:
52-61




 Record created 2017-07-05, last modified 2017-08-29

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