Crises, prices, and poverty – An analysis based on the Mozambican household budget surveys 1996/97–2019/20

Abstract

From the early 1990s, Mozambique experienced sustained economic growth and both consumption and multidimensional poverty reduced until 2014/15. Starting in the second half of 2015, a deep economic crisis hit. Economic growth plummeted and the national currency devalued significantly, leading to a general increase in prices, especially food prices. Since food products account for more than half of the consumption of poor families, and a high percentage of households are net food buyers, we argue that the food price rise is likely a major factor behind the significant upsurge in the poverty rate observed in 2019/20. Using various analytical approaches and robustness checks, we analyse and link the price trends and the shocks experienced between 2014/15 and 2019/20, in an attempt to examine and uncover how they influenced poverty. While being clearly relevant for policy makers and development partners in Mozambique, who may not have fully appraised the consequences of recent shocks on household welfare, our study is relevant to other developing countries. This is especially so for those that depend on imported food, and characterised by a high percentage of net food buyer households, who spend a large part of their income on food, and experiencing contemporary shocks involving price surges, regional disparities and weak governance. This seems even more important now after the surge in global inflation that followed the invasion of Ukraine in 2022.