Poverty and Human Development Report 2009 - UNDP in Tanzania

Kilograms per Adult Equivalent
6
5
4
3
2
1
0
source: hoogeveen et al., 2009
Cassava flour
2007
2000/01
0 20 40 60 80 100
Wealth Percentiles (from Poorest to Least Poor Households)
Chapter 2
Changes in consumption are not driven exclusively by changes in income, but are the combined
effect of changes in income levels (income effect) and changes in relative prices (substitution
effect). even if incomes remain unchanged, households will adjust their mix of consumer goods
in response to changes in relative prices. Between 2000/01 and 2007 food prices increased by
93% on average, but price changes for individual products differed considerably. the price of
beef, for instance, increased by 149%, while that of rice increased by 78%. so, in relative terms,
beef became more expensive, while rice became cheaper.
the household response to these price changes is illustrated in figure 56, which shows the
change in the real price and the change in quantity consumed for nine frequently consumed
products. the figure shows that, with the exception of milk, more was consumed of products
that became relatively cheaper (soft drinks, rice) and less of products that became relatively
more expensive (beef and chicken). for products for which relative prices remained unchanged
(cassava flour, maize grain, sugar and maize flour) the quantity consumed did not change very
much. Consumption patterns of these products, therefore, generally reflect changes in relative
prices rather than a change in the level of income.
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