The paper examines the status and determinants of poverty and inequality among rural households in Girar Jarso district of Central Ethiopia. To measure the status of poverty and inequality, the study made use of cost of basic need approach, Foster-Greer-Thorbecke indices and Gini coefficient. Based on the survey of 120 households, the logistic model was estimated. A three-stage sampling procedure was applied for selection of respondents. The poverty line is found to be 4315.7 Ethiopian Birr. The incidence of poverty was computed to be 45% with an average poverty gap and squared poverty gap of 18.6 and 9.99%, respectively. The Gini coefficient was calculated to be 0.33. The logit model shed light on the demographic and socioeconomic characteristics of households behind the persistence of poverty. The result revealed that poverty is strongly linked to family size, remittance, farm and non-farm income and receiving food aid. The findings suggest also that livelihood diversification, encouraging flow of remittances, promotion of non-farm activities, besides agricultural intensification, and appropriate target to avoid distortionary effects of food aid will constitute an important strategy to accelerate poverty reduction.
Key words: Poverty, income inequality, determinants, household, Ethiopia.