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

Nava Noé J. (), Benjamin Wood and Garduño-Rivera Rafael
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Nava Noé J.: Economic Research Service, U.S. Department of Agriculture, Kansas City, MO 64105, USA
Garduño-Rivera Rafael: Economics Department, School of Economics and Business Administration, Universidad de Navarra, Pamplona, Spain
Authors registered in the RePEc Author Service: Rafael Garduño Rivera

Journal of Agricultural & Food Industrial Organization, 2024, vol. 22, issue 2, 143-154

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.

Keywords: consumer welfare; COVID-19; México; households; poverty; retail food price inflation (search for similar items in EconPapers)
JEL-codes: C31 D12 E31 I32 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/jafio-2023-0041

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