Comparing the Impact of Food and Energy Price Shocks on Consumers : A Social Accounting Matrix Analysis for Ghana
Many countries have been affected by food and oil price shocks. Rising energy costs have manifested themselves through higher prices of gas at the pump and through price increases for many other goods such as kerosene and transport. But in some cou...
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| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/10/9900514/comparing-impact-food-energy-price-shocks-consumers-social-accounting-matrix-analysis-ghana http://hdl.handle.net/10986/6945 |
| Summary: | Many countries have been affected by
food and oil price shocks. Rising energy costs have
manifested themselves through higher prices of gas at the
pump and through price increases for many other goods such
as kerosene and transport. But in some countries there has
also been some degree of protection for consumers for
example when authorities have chosen to try to keep
electricity tariffs affordable through implicit subsidies
(which are unfortunately often poorly targeted). For food
prices, the effect on consumers has often been more rapid
than for oil-related products, as the increase in import
prices have been typically fully passed on to consumers and
has often been accompanied by increases in the prices of
domestically produced foods. Recent attention has therefore
rightly been focused on food prices, but the issue of oil
prices is important as well. While food prices tend to have
a larger direct impact on consumers due to the larger share
of food in total household consumption, oil prices may have
larger multiplier effects than food prices because
oil-related products are used as intermediary products in
many productive sectors. It therefore remains an open
question as to whether the medium-term impact of food or oil
prices is likely to be larger in any given country. It also
remains open to question as to whether urban as opposed to
rural households are most likely to be affected. While urban
households are likely to rely on consumption of imported
goods more than rural households, the weight of food and
possibly oil-related products may well be larger in the
consumption patterns of rural than urban households.
Answering these questions may be useful to guide discussions
on compensatory measures that governments can take to
respond to the twin crisis of higher food and oil prices. In
this context the objective of this paper is to provide a
comparative analysis of the multiplier impact of both types
of price shocks using a recent Social Accounting Matrix for
Ghana. The paper finds that both the direct impacts of food
prices and the indirect impacts of oil prices are
potentially large, so that both should be dealt with by
authorities when considering compensatory measures to
protect households from higher consumer prices. |
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