Ramadan as a Shift in Demand

In life there are many contradictions, but none more so than that of Ramadan. The month of Ramadan should be the month Gambians consume the least amount of food and therefore demand less food than any other month of the year. What we actually see is that Gambians consume more food on this month than in any other month of the year. Why? Maybe someone should do a study on that.

Anecdotal evidence shows that Gambians increase their purchase of rice, sugar, beef and vegetable oil during Ramadan. The average household which buys these items retail - in small quantities - during the course of the year starts to buy in bulk – bags and drums – during the month of Ramadan.

In economic theory, we call this an outward shift in the demand curve. What this means is that during this month, Gambians more food at the given price level than they previously did. The result is similar to what we saw in figure 3.8. if Gambians increase their demand for food during  the month of Ramadan, the result is an increase in the price level and the amount of food sold (in this case, rice, beef, maize, sugar and vegetable oils).

Table 3.12 shows the price changes for rice, maize and beef a month before Ramadan and during the month of Ramadan for the years 2009, 2010 and 2011. For all three goods, we see a jump in their prices during the month of Ramadan; this holds for all three years for 7 of the nine cases.

From now on, you should look at Ramadan as not only the month of fasting, but also as the month of an outward shift in the demand for basic food.

Table 3.12 Changes in the price of food (per Kg) before and during Ramadan

	2011		2010		2009
	Before	During	Before	During	Before	During
Rice (imported)	16	19	15	16	15	15
Beef	70	90	60	70	60	78
Maize	16	17	14	14	16	17

The post above is an excerpt from my upcoming textbook for Principles of Economics 1 taken at the University of The Gambia. The Book will hopefully be out by January 2013 for the start of the new semester.