Crises, prices, and poverty: An analysis based on the Mozambican Household Budget Surveys

Since the early 1990s, Mozambique experienced sustained economic growth and both consumption and multidimensional poverty reduced between 1996/97 and 2014/15. Starting with the second half of 2015, a deep economic crisis, due to multiple factors, hit the country. As a result, 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, especially in urban areas and in the southern region, we argue that the rise in the price of food is likely behind the significant rise in the poverty rate observed in 2019/20. Using various approaches and robustness checks, we analyse and link the price trends and the shocks experienced by the country 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 and on the livelihoods of the poorest part of the population, our study is relevant to other developing countries. Especially for those that are dependent on imported food, 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 after the surge in global inflation that followed the invasion of Ukraine in 2022.