FOOD PRICE INFLATION AND CONSUMER WELFARE IN GHANA

Abstract

The paper analyses the effects of food price inflation on Ghanaian households using GLSS-5 household data. Expenditure endogeneity and truncated expenditures were controlled in the estimation process using the “Augmented Regression Approach” and Heckman’s two-stage procedure, respectively. Symmetry and homogeneity conditions were rejected in the unconstrained LA/AIDS model. The study reveals that cereals and bread; fish; vegetables; and roots and tubers will continue to constitute important share of Ghanaian food expenditure as they collectively constitute 67% of future food expenditure. Food price inflation between 2005 and 2011 has eroded real household food purchasing power by 47.18%.

Keywords

• Food price
• Inflation
• Welfare
• Compensating variation
• Elasticities