Where do rising food prices matter most? Azerbaijan. According to the Department of Agriculture Azerbaijanis spend 73.5 percent of their budget on food. That leaves only 26.5% left over for housing, clothing, education, healthcare and everything else.
Food prices are once again shooting through the roof. The U.N. Food and Agriculture Organization’s food price index hit a record in December of 2010. It’s cereal price index –which includes things like rice, wheat and corn– rose 39% over the year, reaching its highest point since August 2008.
While this is of some concern to American consumers. The impact on our wallets will be slight compared to other parts of the world. Americans spend less than 10 cents of their consumer dollar on food. Tanzanian’s, by contrast, spend 73.2 percent. Albanians, Yemenis, Sri Lankans, Indonesians and Tajiks all spend more than half of their budgets on food.
The USDA calculated the price elasticity of demand for food in these countries, meaning how consumption reacts to rising prices. It estimates that demand for bread and cereal in Azerbaijan falls 0.4% for every percentage point rise in their price. That means that Azerbaijani’s are eating some 15% less bread and cereal than a year ago. And because they have less money left over after they pay for food, they are also consuming less of everything else.