A welfare measure of consumer vulnerability to rising prices of food imports in the UAE

► Consumer welfare loss is 4.5% of the value of December 2010 food imports. ► CVs by quintile are USD 33.93, 42.00, 56.60, 70.54, and 141.90. ► CVs represent 3.45%, 2.02%, 1.69%, 1.26%, and 0.96% of household income. ► Poorest household are 3.5 times more vulnerable than richest households. ► Recommend targeted assistance instead of imposing price caps. The recent and expected continuing rise in food prices has re-ignited concern and discussion in the United Arab Emirates about the country’s vulnerability to food supply shocks. Defining vulnerability as the compensating variation relative to household income, we find that although UAE households in the lowest income quintile spend on food on average less than a quarter of what households in the highest income quintile spend, the former are 3.5 times more vulnerable to rising prices of food imports than the latter.