Food Prices, Household Income, and Resource Allocation: Socioeconomic Perspectives on Their Effects on Dietary Quality and Nutritional Status

Abstract

The recent rise in agricultural commodity prices has been dramatic, and food prices are likely to follow an upward trend, at least in the medium-term. Moreover, the recent financial crisis has also lowered incomes and increased food prices. Not only does this reduce dietary quality, but expenditures for health, sanitation, and education will decline, all of which will have a detrimental effect on health and nutrition outcomes. To provide some perspectives on the role of major socioeconomic factors in driving health and nutrition outcomes. We use demand elasticity parameters estimated from household-level survey data to simulate an increase in food prices, which is then mapped into energy and nutrient intakes. Furthermore, we also use household-level data to analyze the implications of unequal intrahousehold distribution of food for the nutritional status of adult women and female children. A 50% increase in food prices results in a decrease in energy intake of 5% to 15% and in a decrease in iron intake of 10% to 30%, depending on the strength of the induced income effect. In a country like the Philippines, this would be equivalent to an increase of 25 percentage points in the proportion of women not meeting their requirements for iron intake. Increasing food prices will make fighting micronutrient malnutrition in developing countries more difficult. In societies where preference is given to males in the intrahousehold distribution of nonstaple foods, this objective will be even more challenging.