The rising cost of living is hitting Australian households hard. Finder’s Cost Of Living report, released today, revealed 78 per cent of Australians had had to cut back on their spending to cope with surging inflation, and 51 per cent reported feeling financially pressured due to the increased costs.
With the Reserve Bank's (RBA) rate hikes and energy price rises - triggered by international factors - it’s no surprise that housing (for mortgage holders and renters) and the cost of energy are among the main sources of stress. However, the more interesting insight is the rise in the impact of one other essential expense, groceries.
Finder has been running its Consumer Sentiment Tracker (CST), a continuous survey of the Australian public, since 2019. One of the questions we ask as part of that survey is related to the bills or expenses that are causing financial stress for participants. Respondents are able to nominate anything from zero to three sources of financial stress. Over the past couple of years, the percentage of Australians listing the top four expenses – housing, groceries, petrol and energy – has increased. However, groceries have experienced the most dramatic surge.
While only around 20 per cent of households nominated groceries as a cause of financial stress a few years ago, that figure has risen steadily through the years. By March 2023, it had increased to 43 per cent, nudging ahead of the 42 per cent of Australians who cited housing costs as their most stressful expense.
So, what’s behind this dramatic increase? Price increases in the retail sector have been driven by three main factors. Supply chain issues - caused by COVID-19 - the increased costs of energy and fertiliser - triggered by the war in Ukraine - and unpredictable weather patterns over the past couple of years in Australia. Combined, they have had a devastating effect on consumers.
The average Australian household now spends $185 a week on groceries, according to the CST, up $37 a week compared to 12 months prior. This is a total cost increase of $1,924 per year.
This increase in grocery prices, along with housing costs, has significantly impacted Australians' financial security. The average Australian now believes their savings would last only 14–15 weeks if they lost their job - down from around 18 weeks at the beginning of 2021.
The good news is that it looks like all three of the driving factors behind this price inflation are slowing. Economists are tipping inflation to peak soon (if it hasn’t already) and fall back towards the end of the year, with cash-rate cuts to follow. For most households in Australia, that can’t come too soon.
To help manage the rising cost of groceries in the meantime, here are some tried and true tips on how to reduce your grocery spend:
Plan your meals: Creating a meal plan for the week can help you avoid impulse purchases and reduce food waste. Make a shopping list based on your meal plan and stick to it.
Buy in bulk: Purchasing non-perishable items in bulk can save money in the long run. Be sure to compare prices per unit to ensure you're getting the best deal.
Shop for seasonal produce: Fruits and vegetables tend to be cheaper when they are in season. Buying in-season produce can help keep your grocery bill down.
Look for sales and discounts: Keep an eye out for discounts and sales on items you regularly purchase. Watch out for items discounted towards the end of the day or week.
Join retailer loyalty programs: While the direct-value return on these programs tends to be only around 1 per cent, they often allow you access to extra discounts and offers that are not available to non-members.