Groceries cause the most stress as weekly household spend surges

Official inflation is falling, but consumers are not noticing relief in one key expense as they adjust their spending patterns.

Spending at supermarkets is surging, Compare the Market has found. Picture: iStock

Grocery costs are the biggest pain point for Aussie consumers despite the recent pullback in official inflation figures, new research has found.

And homeowners, rather than renters, are more likely to report that their savings have shrunk or stagnated in the past year, according to Compare the Market’s Household Budget Barometer 2024 report.

Its analysis of more than 3000 consumers discovered that everyday expenses are “sending us spiralling”, with groceries the most worrisome bill, followed by mortgage repayments, energy bills and rent.

“The median grocery spend was $200 in August 2024, compared with $150 in January 2024 … a 33 per cent rise in just six months,” the report says.

“The increase could be in part due to some Australians choosing to cook more at home and dine out less,” it says. Bureau of Statistics inflation data puts food and beverage growth at 3.4 per cent year-on-year.

The findings come as big supermarkets come under fire from regulators and the Albanese government over pricing practices.

However, the fastest-rising component of Australian inflation over the past two years – insurance – does not appear to worry consumers as much.

Compare the Market economic director David Koch said spending less money on eating out and takeaway meals meant “we spend more at the supermarket, and because most of us do a grocery shop once or more a week we’re confronted with bill shock every few days”.

“Australians are becoming fed up with pricing practices that feel like a coin flip,” he said.

Mr Koch said people did not notice the insurance sting because it was not tangible, and many set up automatic direct debits.

“Letting a policy auto-renew can be an expensive mistake when we miss out on deals and offers available to customers who shop around and switch,” he said.

“We urge Australians to treat their insurance premiums like their groceries and compare them like products on the shelf.”

Catapult Wealth director Tony Catt said the loudest concerns about grocery costs were being voiced by his retiree clients.

“That era did a big shop once a week, and they just notice a big difference in their weekly grocery spend – I hear that a lot,” he said.

High rental costs were also a concern, as were expenses related to children, Mr Catt said.

“The cost of sport is outrageous,” he said. “Because of the lack of volunteers, clubs are struggling to do things for free,” he said.

Mr Catt said even higher-income clients had noticed the sharp increases in the cost of living, but he said “the bookends are doing fine” during the current cost crunch.

“The baby boomers are doing fine, and the double-income-no-kids at the other end are fine,” he said. “It’s the middle crowd with mortgages, rent, kids, insurance, cars and petrol – they’re really getting squeezed.”

Compare the Market economic director David Koch. Picture: Jono Searle

Compare the Market’s research found the pressure on households was not evenly spread, with people earning above $150,000 less likely to feel stressed and see their savings shrink.

“Not everyone can earn a better salary or take on a side hustle to make extra cash,” Mr Koch said.

“What concerns me is that people are taking out debt just to cover the cost of essential groceries and bills and the people who can least afford it end up paying much more in interest and fees,” he said.

Originally published as Groceries cause the most stress as weekly household spend surges