The short-term impact of price shocks on food security-Evidence from urban and rural Ethiopia

Abstract

This study investigates the impact of food price changes on food security in urban and rural Ethiopia. Using a quarterly household survey panel dataset and price data collected directly at markets, a negative effect of high cereal prices on some, but not all considered indicators of food security was found, controlling for unobserved heterogeneity across households. The results indicate that increases in cereal prices are generally, but not always, associated with households having a lower number of meals and switching to less preferred foods. Diet diversity and calorie consumption, however, show no clear response to grain price changes. Only partly in line with existing notions, our results suggest that the aggregate effect is negative for both the urban and rural populations (with the strongest among the urban poor) but that even poor households are able to maintain their basic food consumption through periods of moderate price changes.