Changes in household food consumption patterns and demand elasticities in Indonesia: Implications for policy

Over the past decade, Indonesia's food consumption patterns have undergone profound changes due to rapid population growth, accelerating urbanization, shifting dietary preferences, and the escalating impacts of climate change. This study investigates Indonesia's household consumption of strategic food commodities in 2013 and 2023, employing the Linear Approximate Quadratic Almost Ideal Demand System (LA–QUAIDS) model with cross-sectional data from the Indonesian socioeconomic survey. The analysis is disaggregated across four expenditure groups to estimate consumption shares, own-price and expenditure elasticities, and compensating variation. The results indicate a marked structural transformation in household consumption, consistent with Engel's Law, as the share of strategic food expenditure in total consumption declines as income rises. A dietary transition is also evident, with reduced expenditure shares for staples such as rice and increased expenditure shares for processed foods. However, rice remains a critical commodity for low-income households, whose demand exhibits persistently high inelasticity. Compensating variation analysis also reveals that increases in rice price disproportionately impose higher welfare losses on the poorest quartile. The decline in expenditure elasticity is also evident among all households' protein-rich commodities, notably meat, eggs, and soy products. These findings underscore the importance of comprehensive food policies that maintain the affordability and stability of staple commodities, particularly to safeguard vulnerable households, while accommodating broader dietary shifts.