This chart plots the share of household income in a given country spent on food against the level of household income in that country.
Neil Dutta, head of U.S. economics at Renaissance Macro, warns that rising food prices may serve as an additional economic headwind to some of the emerging markets in the top-left region of the chart (India, China, Indonesia, and Nigeria, to name a few).
“Food prices are climbing for a range of items including cattle, cocoa, sugar and coffee,” says Dutta.
“Broadly speaking, the rise in food prices will affect lower-income countries more than higher-income ones. There is a clear inverse relationship between incomes and share of consumption expenditures spent on food. Consumers in low-income countries spend a larger share of their income on food and a rise in food prices is akin to a tax hike, biting into disposable income.”