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Losing Ground: Measuring the Welfare Effects of Retail Food Price Inflation during the COVID-19 Pandemic on Mexican Household

Author

Listed:
  • Nava Noé J.

    (Economic Research Service, U.S. Department of Agriculture, Kansas City, MO 64105, USA)

  • Wood Benjamin D. K.

    (Heifer International, Little Rock, USA)

  • Garduño-Rivera Rafael

    (Economics Department, School of Economics and Business Administration, Universidad de Navarra, Pamplona, Spain)

Abstract

As worldwide food prices rise, there is a growing interest in understanding the effect of these increases on households. Building on previous work, while applying recent methodological advances, we focus our attention on México during the COVID-19 pandemic. We document these price escalations for a basket of foods representative of Mexican households’ diets. The price increases are substantial across the basket, ranging from 20 percent in meat to 40 percent in tortilla. Using these estimates, we calculate the welfare effect from the recent food price escalation to cost households $17.07 billion annually, close to 1.5 percent of Mexico’s Gross Domestic Product in 2020. We estimate households would need to increase their food expenditure budgets by 28.66 percent, the compensating variation, to achieve pre-price increase utility levels.

Suggested Citation

  • Nava Noé J. & Wood Benjamin D. K. & Garduño-Rivera Rafael, 2024. "Losing Ground: Measuring the Welfare Effects of Retail Food Price Inflation during the COVID-19 Pandemic on Mexican Household," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 22(2), pages 143-154.
    • Handle: RePEc:bpj:bjafio:v:22:y:2024:i:2:p:143-154:n:1001
    DOI: 10.1515/jafio-2023-0041
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    More about this item

    Keywords

    consumer welfare; COVID-19; México; households; poverty; retail food price inflation;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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