The Impact Of Price Changes On Demand Among Poor Households In A South African Township

Abstract

The study reported in this article used household level data to analyse the impact of recent price changes on the demand for food and non-food items among households of different poverty statuses in a township of Bophelong, Gauteng Province, South Africa. The unprecedented rises in prices prompt households to make adjustments on their consumption patterns as real income declines. In this paper, the poor are separated from the non-poor by means of an income poverty line and their responsiveness to price changes compared. Of the sampled population, 56% were found to be poor of which 26% of the participants were categorised as moderately poor, with 30% extremely poor. Changes in demand patterns of households are estimated by computing the demand elasticities that explain the level of demand by a household given the structure of relative prices faced and household income. The study reports that households respond differently to rising prices depending on their poverty levels.