Introduction: Food security has become one of the most critical challenges in contemporary economic and social development. Defined as the availability of sufficient, safe, and nutritious food for all individuals at all times, the food security is closely connected to health, social stability, and sustainable growth. In Iran, despite the country’s significant agricultural resources and ecological diversity, the combined effects of climate change, international sanctions, and domestic macroeconomic instability have raised serious concerns regarding the resilience of food systems. Among the various macroeconomic instruments, monetary policy plays a particularly important role in shaping household access to food. It directly affects the purchasing power of families through inflation and indirectly influences food production, distribution, and pricing structures. Hence, analyzing the interaction between the monetary policy and household dietary patterns provides valuable insights into the broader nexus of economic stability and social welfare. This study aimed at providing a comprehensive examination of how the monetary policy would influence the food security among Iranian households, with an emphasis on caloric intake derived from distinct food groups. Unlike the previous research often relying on aggregate food price indices or overall calorie consumption, this investigation disaggregated the food groups to reveal nuanced substitution and complementarity effects within the household consumption basket. Focusing on both urban and rural areas over a long-time horizon (2004-2022), the research highlighted the heterogeneity of responses across regions and income groups. This pioneering perspective enabled the identification of hidden vulnerabilities in the food system, clarified the channels through which monetary shocks were transmitted to household nutrition, and provided an evidence-based foundation for policy design aimed at reducing the adverse impacts of inflationary pressures on food consumption and dietary quality.
Methodology: The study employed the panel data covering thirty provinces of Iran over a nineteen-year period (2004-2022). Household income-expenditure surveys were used to extract consumption data for 168 food items, which were then classified into fourteen major food groups. Caloric values were calculated using a matrix of nutritional composition, enabling the estimation of per capita daily caloric intake across regions and years. To capture the influence of monetary policy, the study used money supply (liquidity) as the key policy indicator, complemented by household real income and group-specific food price indices. Interaction terms between liquidity, income, and prices were also included to assess indirect and non-linear transmission mechanism. Given the structure of the dataset and the possibility of cross-equation correlation, the analysis was conducted using the Seemingly Unrelated Regression (SUR) model. This econometric approach allows the simultaneous estimation of multiple equations, each representing the share of calories derived from one of the fourteen food groups. By accounting for correlated error terms, SUR provides more efficient and reliable estimates compared to separate regressions. Stationarity tests confirmed the suitability of the log-linear specification. Model estimation was implemented with Feasible Generalized Least Squares (FGLS), and diagnostic checks, including the Breusch-Pagan test, verified the existence of cross-sectional dependence among equations, justifying the methodological choice. This rigorous framework ensures that the findings accurately capture both the direct and interaction effects of monetary policy on the household food consumption patterns.
Results and Discussion: The study results indicated that the monetary policy exerted significant and multifaceted effects on the household food consumption. In both rural and urban areas, expansionary monetary policies, reflected in the growth of liquidity, tended to alter the composition of calorie intake rather than the overall caloric level. In rural regions, rising liquidity, coupled with relative price adjustments, led to a greater reliance on essential and lower-cost food groups such as cereals. Simultaneously, there was a contraction in the consumption of higher-value items like meat and dairy. The findings also suggested that the income gained in rural areas would not necessarily translate into improved dietary diversity; instead, they often would reduce the share of certain protein-rich items, signaling substitution toward foods perceived as more affordable or accessible under inflationary conditions. In urban areas, the dynamics were more complex. Calorie shares from cereals, oils, and low-cost items declined when inflationary pressures increased, whereas substitution effects shifted consumption toward or away from specific protein or plant-based items depending on relative price changes. For instance, poultry and fish exhibited notable substitution patterns with red meat, fruits, and vegetables. Meanwhile, dairy consumption in urban households demonstrated heightened sensitivity to liquidity-induced price fluctuations, reflecting its role as a semi-essential but inflation-prone food group. Overall, the evidence revealed that the monetary policy not only changed the quantity of calories but also reshaped their nutritional quality, with potential long-term implications for public health and food security.
Conclusion and Suggestions: The analysis underscored the importance of monetary policy as a determinant of food security, particularly in contexts characterized by high inflation and economic volatility. In rural areas, where dietary options were narrower, expansionary monetary policy amplified reliance on cereals and reduced dietary diversity, thus reinforcing nutritional vulnerability. In contrast, the urban households exhibited greater flexibility in consumption patterns, but their sensitivity to inflationary shocks was pronounced, especially for protein-rich and nutrient-dense foods. This divergence highlighted the need for regionally tailored strategies in policy design. Moreover, the results confirmed that while overall caloric adequacy might not be severely threatened, the quality and balance of diets were compromised by inflationary monetary dynamics, raising concerns about hidden hunger and micronutrient deficiencies. The study concluded that the monetary policy must be integrated into the food security strategies. Stabilizing liquidity growth and controlling inflation are crucial to preserving both the affordability and diversity of household diets. Policy recommendations include enhancing targeted subsidies for essential nutrient-rich foods, expanding low-interest credit facilities for agricultural producers, and implementing distribution mechanisms that buffer households against food price volatility. In addition, educational programs on nutritional awareness can help families make healthier choices under budget constraints. By recognizing the intricate linkages between macroeconomic management and household nutrition, this research provides a foundation for designing policies that simultaneously pursue price stability, economic development, and the protection of food security.