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Economic & Sector Work :: Policy Note

Ethiopia : Explaining Food Price Inflation

ADVERSE IMPACTS AGGREGATE DEMAND AGGREGATE SUPPLY AGRICULTURAL COMMODITY AGRICULTURAL DEVELOPMENT AGRICULTURAL EXPORTS AGRICULTURAL GOODS AGRICULTURAL MARKET AGRICULTURAL MARKETING AGRICULTURAL MARKETS AGRICULTURAL OUTPUT AGRICULTURAL PRICES AGRICULTURAL PRODUCT AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTION SYSTEMS AGRICULTURAL PRODUCTIVITY AGRICULTURAL PRODUCTS AGRICULTURAL SECTORS AGRICULTURAL VALUE AGRICULTURE AGRICULTURE MARKETS AGRICULTURE ORGANIZATION AUCTION AVERAGE PRICE BAKING BASE YEAR BENCHMARK BORDER PRICES CAPACITY BUILDING CENTRAL BANK CENTRAL BANKS CEREAL PRICES CEREAL PRODUCTION CEREAL YIELD CEREALS COMBINES COMMERCIALIZATION COMMODITIES COMMODITY EXCHANGE COMMODITY PRICE COMMODITY PRICES CONSUMER PRICE CONSUMER PRICE INDEX CONSUMERS COST OF LIVING CROP PRODUCTION CROP ROTATION CUTTING DEBT DEMAND FOR FOOD DEMAND MANAGEMENT DIVIDENDS DOMESTIC PRODUCERS ECONOMETRIC ANALYSIS ECONOMIC TRENDS EDIBLE OILS ELASTICITY ELASTICITY OF DEMAND EXCESS DEMAND EXPENDITURE EXPENDITURES EXPORT EXPORT TRADE FARM FARM EMPLOYMENT FARM INCOME FARM INPUTS FARMERS FINANCIAL INSTRUMENTS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SECTOR FOOD AID FOOD AVAILABILITY FOOD CROPS FOOD DEMAND FOOD EXPENDITURES FOOD IMPORTS FOOD MARKETS FOOD POLICY FOOD POLICY RESEARCH FOOD PRICE INFLATION FOOD PRICES FOOD PRODUCTION FOOD SECURITY FOOD SUPPLY FOOD TRANSFERS FOODS FOREIGN EXCHANGE FRUITS GDP GLUTEN GRAIN GRAIN PRICES GRAIN PRODUCTION GRAIN TRADER GRAIN TRADERS GRAINS GROSS DOMESTIC PRODUCT GROWTH RATE HOUSEHOLDS HUMAN CAPITAL IFPRI IMPORT TARIFFS INCOME INCOME EFFECTS INCOME ELASTICITY OF DEMAND INFLATION RATE INPUT PRICES INTEREST RATES INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE INTERNATIONAL MARKET INTERNATIONAL MARKETS INTERNATIONAL TRADE LIQUIDITY LIVE ANIMALS LIVESTOCK LIVESTOCK PRODUCTS LIVESTOCK SECTOR M2 MAIZE MARKET INFORMATION MARKET INTEGRATION MARKET PRICE MARKET PRICES MARKET SHARE MARKET SUPPLY MARKETING MEAT MERCHANDISE MERCHANDISE EXPORTS MIDDLEMEN MILLS MOBILIZATION MONETARY POLICY MONEY SUPPLY PARITY PRICE PEPPER PER CAPITA INCOME PER CAPITA INCOMES POTATO PRICE ADJUSTMENT PRICE ADJUSTMENTS PRICE CEILING PRICE CHANGE PRICE CHANGES PRICE DECLINES PRICE DETERMINATION PRICE EFFECT PRICE FORECASTS PRICE INCREASE PRICE INCREASES PRICE INFLATION PRICE LEVEL PRICE LEVELS PRICE MOVEMENTS PRICE TREND PRICE TRENDS PRIVATE STORAGE PRODUCT MARKET PRODUCTION COSTS PRODUCTION INCREASES PRODUCTIVITY PULSES PURCHASING PURCHASING POWER REAL GDP REAL INTEREST RATE RURAL AREAS SALES STOCKS STORAGE CAPACITY STRUCTURAL CHANGE SUBSISTENCE AGRICULTURE SUBSTITUTION SUGAR SUPPLY INCREASE SUPPLY INCREASES SURPLUS SURPLUSES T-BILLS TRADE FLOWS TRANSACTION TRANSACTIONS COSTS TRANSACTIONS DEMAND FOR MONEY TREASURY BILLS VALUE ADDED VOLATILITY WAREHOUSE WEALTH WFP WHEAT WHOLESALE PRICE WHOLESALE PRICES WORLD FOOD PROGRAM
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World Bank, Washington, DC
Africa | Ethiopia
2014-08-20T21:20:04Z | 2014-08-20T21:20:04Z | 2007-12

This study sheds some light on the challenges facing policy makers in Ethiopia, but much remains to be better understood. Over the past three years, food price inflation in Ethiopia has been persistently high, and overall inflation has been in double. While the spike in 2002 can be broadly explained by the drought-induced output shock that year, over the period as a whole, food price - and in particular grain price - trends present a puzzle in several respects. This is a serious concern for policy-makers, not least because the poor spend most of their income on food, and are adversely affected by rising prices. Even in rural areas, it is estimated that about half the population are net buyers of food. The issue of food price inflation has attracted rising concern in the national media and among policy makers, academics and of course the public at large, as well as among development partners. The structure of this note is as: authors review the key features of Ethiopian grain markets, before laying out a basic methodological approach to analyze the drivers of inflation, followed by a review of the relative importance of different explanatory factors on the demand, supply and marketing sides. Authors then turn to explore the impacts of food price changes on households, drawing on the most recent household data available. The final section highlights emerging policy conclusions.

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