The Impact of Price Changes on Household Welfare

The study of household Welfare is one the most important economic research in each country. With such knowledge, proper policies for improving people’s welfare condition could be set. This paper attempts to evaluate the impact of price rises on household Welfare for three income groups (low, average and high) in four cross-sections of 1375, 1380, 1385 and 1390, based on Household Budget Survey data. A Linear expenditure System (LES) was used for estimating parameters of the model. Our findings show that although rising prices would lower household welfare for all three income groups, but their declining trends are very different, indicating the necessity of policy differentiation.