Determinants Of Household Consumption Expenditure The Case Of The Burayu Sub-City, Oromia, Ethiopia

Abstract

This study examined the determinants of household consumption expenditure in Burayu Sub-City. Household consumption expenditure refers to the monetary value spent by households on various commodities (both food and non-food items) to meet their needs over a specified period. Decisions regarding how much to consume or save are microeconomic issues that pertain to individual economic units, yet existing research in this specific area remains limited. The study aimed to describe and evaluate household consumption expenditure in Burayu Sub-City through a mixed-methods approach, utilizing primary and secondary data gathered via structured questionnaires, featuring both closed and open-ended questions. A stratified random sampling technique was employed to categorize households into three woredas, from which 392 households were randomly selected using Yamane’s formula (1967). Out of these, 374 households (a 95.41% response rate) provided complete responses, while 18 (4.59%) did not respond. The research adopted both descriptive and explanatory designs, employing Multiple Linear Regression in SPSS 26 to analyze the factors influencing consumption expenditure. Descriptive statistics, regression analysis, and ANOVA were utilized to interpret the data. The findings revealed that marital status, job status, income level, saving behaviour, housing status, inflation expectations, credit availability, and family size significantly influenced household consumption expenditure. Based on these findings, the study recommends policies aimed at enhancing job creation, financial literacy, and savings, in addition to improving access to credit and strategies for inflation mitigation. The research also suggests income support for vulnerable households, affordable housing programs, family-size-targeted interventions, and gender-responsive policies. Finally, the importance of strengthening data-driven decision-making and localized education and skill development initiatives is emphasized to enhance household consumption patterns in Burayu Sub-City. This study provides valuable insights for policymakers striving to improve household welfare and economic stability in the region