Studying the Effect of Price Changes on the Welfare of Urban Households Disaggregated By Income Deciles and Commodity Groups

This study has assessed the welfare effects based on increasing in the price of eight commodity groups. This research has been accomplished among Iranian urban households of different income deciles in terms of linear expenditure system via using Compensating Variations in the period 1372-1392 by time series data. The results indicate that the increasing in prices leads to decreasing the welfare of lower income deciles rather than the higher income deciles, but with rising price a group commodity(and stability of prices of other commodity groups) in terms of reduced welfare, the most vulnerable income deciles is different. Based on the results, it is suggested that the amount and type of subsidy to the income deciles must be different, and special attention must be paid to low-income groups in the liberation of prices due to inflation.