Own Price and Income Elasticities of Food in Malaysia

Food consumption in Malaysia has shifted away from starchy staples example rice to move towards wheat and livestock products, seafood, fruits and vegetables when increasing in income. The main objective of this paper is to outline the framework to analyse the elasticities of demand of food in Peninsular Malaysia. This study is adopting cross-sectional household data from the Household Expenditure Survey (HES), conducted by the Department of Statistics, Malaysia. Generally, the expenditure elasticites for most of the all food groups are positive and less than one (0 < epsilon < 1), except for cereal, fish, milk, vegetable and beverage indicating that food groups are normal and necessary goods, and there are no inferior foods. The uncompensated own-price elasticities for most of the selected food groups are much lower than the total income elasticities. The largest absolute value of uncompensated own-price elasticity is the other food commodity group (-1.117). This implies that demand reacts elastically to changes in prices of other groups commodities while the lowest elasticities is sugar (-0.480) where demand reacts least to price changes.