Inflation

Does Inflation Kill? Food Price Inflation and Child Survival

Since the dawn of the new millennium, significant stride has been made in terms of reducing under-five mortality. While advances in medicine, such as vaccination, considerably reduced communicable diseases, many countries in African, Latin American and elsewhere in the less-developed world continue to grapple with food price hikes that cause hunger and food shortages. The impacts of such food price hikes during the critical periods of early life-the period between inception and the first 1,000 days after birth-on child survival has not been well understood. Using a uniquely constructed data from Ethiopia that combines the Demographic and Health Survey and high-frequency (monthly) food retail prices over 10 years period, we examine the impacts of in-utero exposure to food price inflation on child survival. Follow survival events since inception, we estimate the causal impacts of exposure to malnutrition during each month of early life. The results show that exposure to 10% increase in month-on-month staple food price inflation during in-utero increases childhood mortality by up to 0.03%. Our analysis also uncovers substantial heterogeneity in the effects of early life malnutrition on child mortality depending on specific month of exposure.

Rising food prices and household welfare in Ethiopia: Evidence from micro data

The Ethiopian economy has witnessed a double-digit rate of inflation since 2003, culminating at 53% in June 2008. Particularly the significant rise in the relative prices of grain and other foodstuff such as sugar, edible oil and other necessities in recent period are very worrisome. Evidently such large changes in both absolute and relative prices in a space of few years can undermine the rebound in per capita incomes in the last decade and the poverty reduction effort of the government. The gravity of the problem has been well understood by policy makers, and efforts are underway to cushion vulnerable households from the consequences of the price surge. The potential role of such interventions can only be known if welfare effects of rising prices are understood. In addition, better measures of the key parameters that drive the demand for grain and other goods is a useful input to the analysis of the causes of relative price changes in Ethiopia.