This study analyses the welfare and poverty effects of the 2007-08 food-price crisis on households in Guatemala. Estimates reveal that the price increases negatively affected 96.4 per cent of households and resulted in a 1.1 per cent increase in the national poverty rate. On average, households lose 2.3 per cent of their expenditure capacity, and high food prices have a regressive negative effect. The total welfare loss for all households in the country is estimated to be nearly 2 per cent of national aggregate expenditure, but the cost of compensating the poorest households would be only 0.5 per cent of national aggregate expenditure. © 2011 Taylor & Francis.