Understanding household food demand in Sri Lanka using a two-step budgeting framework

Purpose Sri Lanka has been affected by a severe economic crisis in recent years, which has changed food consumption behavior. Therefore, this study examines household demand for major food groups in Sri Lanka and provides evidence on how households respond to changes in food prices and expenditure. Design/methodology/approach A two-step budgeting framework combined with the quadratic almost ideal demand system (QUAIDS) was employed to estimate expenditure and price elasticities for major food groups, including cereals, pulses, vegetables, fruits, fish, meat, eggs and milk products, using data from the Household Income and Expenditure Survey (HIES). Findings The results show that cereals, pulses, eggs and vegetables all have an expenditure elasticity of less than one, while for fruits, fish, meat and milk products, the elasticity is greater than one. The estimated own-price elasticities suggest that households are more responsive to price changes for fruits, fish, eggs, meat and milk products than cereals, pulses and vegetables. Research limitations/implications This study's findings will help policymakers develop appropriate policies and targeted programs to mitigate the impact of the ongoing economic crisis and improve the overall well-being and nutrition of the Sri Lankan population. Originality/value This study provides a recent empirical evidence on household food demand in Sri Lanka using a two-step budgeting framework and nationally representative HIES data.