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Food prices and the wages of the poor: A cost-effective addition to high-frequency food security monitoring

Published by:
Online Location
Publication date
Type of Publication:
Articles & Journals
Focus Region:
Asia and the Pacific
Sub-Saharan Africa
Focus Topic:
Nutrition / Food Systems
Market / Trade
Derek Headey, Fantu Bachewe, Quinn Marshall, Kalyani Raghunathan and Kristi Mahrt

The affordability of nutritious food for “all people, at all times” is a critically important dimension of food security. Yet surprisingly, timely high-frequency indicators of food affordability are rarely collected in any systematic fashion despite price volatility emerging as major source of food insecurity in the 21st Century. The 2008 global food crisis prompted international agencies to invest heavily in monitoring domestic food prices in low and middle income countries (LMICs). However, food price monitoring is not sufficient for measuring changes in diet affordability; for that, one must also measure changes either in income or in an income proxy. The article proposes using the wages of unskilled workers as a cheap and sufficiently accurate income proxy, especially for the urban and rural non-farm poor. It first outlines alternative measures of “food wage” indices, defined as wages deflated either by consumer food price indices or novel healthy diet cost indices. It then discusses the conceptual strengths and limitations of food wages. Finally, it examines patterns and trends in different types of real food wage series during well-known food price crises in Ethiopia (2008, 2011 and 2022), Sri Lanka (2022) and Myanmar (2022). In all these instances, food wages declined by 20–30%, often in the space of a few months. In Myanmar, the decline in real wages during 2022 closely matches declines in household disposable income. Authors strongly advocate tracking the wages of the poor as a timely, accurate and cost-effective means of monitoring food affordability for important segments of the world’s poor.