Inflation rips off Aussies as cost of living hikes grocery bills by $1400

SPECIAL INVESTIGATION: Families are spending an extra $1400 a year at the supermarket as prices soar - here are our top tips on how to save on groceries, petrol, power and your mortgage.

Supermarket prices have surged by at least 12 per cent since last year, an investigation by The Daily Telegraph shows, adding $1400 to a typical family’s annual grocery bill.

The increases exposed by the investigation are far greater than those captured in the most recent official inflation data, revealing for the first time the full extent of the financial pressure households are under in the aisles.

While prices are soaring at every major supermarket chain and at all price points, arguably the most concerning finding is that some of the biggest jumps have been in the most basic options.

Shoppers buying the cheapest groceries are paying as much as 17 per cent extra to fill their baskets compared to last year.

Supermarkets’ mid-tier self-branded ranges are at least 14 per cent pricier, and filling a trolley with high-end brand names has gone up by 12 per cent-plus.

The Telegraph’s results indicate that supermarket prices are rising at more than twice the speed of the Australian Bureau of Statistics’ consumer price index, which increased 5.1 per cent nationally in the year to the end of March.

According to the ABS, Sydney’s CPI only rose by 4.4 per cent; food and non-alcoholic drinks were up by even less than that.

The average weekly supermarket bill for a NSW family of four or more was $226 in 2021, according to Canstar Blue.

The Telegraph’s price comparison suggests this has since risen by about $27 a week, adding $1400 to annual costs.

On top of this, many households’ electricity bills will rise by at least $200 a year from next month. The price of petrol is up 70 per cent on 12 months ago.

And monthly repayments on a $500,000 mortgage have risen by $200 since April, with more increases on the way.

Supermarket prices are skyrocketing — and there’s no end in sight.

Yet for many households, the number one source of budgeting pain is supermarket shopping, according to a survey by One Big Switch.

“Grocery bills are now causing families real grief,” said One Big Switch spokesman Joel Gibson.

Supermarket comparison service Frugl’s CEO Sean Smith said producers were no longer able to absorb cost increases.

Russia’s invasion of Ukraine sent fuel prices skyrocketing. Those two countries were also major producers of wheat and vegetable oils.

Even the cost of the metal for cans had soared, Mr Smith said.

Labour was still in short supply following lengthy border closures triggered by Covid, he added, and key parts of China remained in lockdown.

“The cost of production at every level has gone up,” Mr Smith said.

One Big Switch spokesman Joel Gibson. Picture: Tim Hunter

Our results show that Coles and Woolworths are still charging about the same amount as each other, whether it be for budget lines, supermarket labels or well-known brands.

In The Telegraph’s comparison, IGA was more expensive than its larger competitors. This was not the case when Choice undertook its survey, which was based on surveying a larger number of locations.

An IGA spokesman said “our stores overall are significantly more price competitive than a few years ago”.

For the cheapest groceries, Aldi prices were about 8 per cent below the bigger chains.

For a basket of supermarket labels, Aldi was about 9 per cent less expensive.

In response to questions from The Telegraph, Aldi provided its recent “Price Report”, which said: “We will maintain our price gap, even if prices on individual items do go up.”

A Coles spokeswoman said it had reduced prices on more than 2000 of its 20,000 items, but “a number of factors (are) driving inflation for all retailers, including increases in the cost of raw materials, energy price rises and freight costs”.

A Woolworths spokeswoman said it recently cut the price of more than 300 traditional winter products until August, and introduced more than 650 own-brand products, including flour, sugar and other essentials.

“We’re working hard to manage … industry-wide inflationary pressures,” Woolworths’ spokeswoman said.

The Priestley family — Emily, 15, Denia, Peter, 17, Mark, and Ben, 13 — have been looking at ways to save money. Picture: Justin Lloyd

The Priestley family of Marsden Park in Western Sydney is doing everything they can to cut costs, including switching to Aldi for groceries.

“We looked and realised we really need to do something to watch the money,” Mr Priestly said.

They also changed home lenders.

“Before we were at (one of) the Big Four banks, but when we looked around we realised they weren’t competitive with their rates,” Mr Priestley said.

And they are buying petrol from Costco.

HACKS TO SAVE YOU MONEY

You really can significantly reduce the immense cost of living pressure coming from all quarters right now.

So where do you begin? Start with the “big rocks”: mortgage or rent, petrol, groceries, power costs and insurances.

Let’s take them one by one.

GROCERIES

Supermarket comparison service Frugl’s CEO Sean Smith told The Daily Telegraph that consumers could save up to 30 per cent on their grocery bill by splitting their shop between the majors.

Mr Smith said Woolworths’ and Coles’ catalogues contained only 300 specials while the Frugl app reveals up to 5000 items that are on sale at the giants at any given time.

“You can make very big savings if you shop across both retailers, not just one,” Mr Smith said.

If you don’t have time to visit Woolies and Coles, Mr Smith said one option was to order online from the chain that is further away.

The Telegraph has no association with Frugl or any supermarket chain.

Consumer group Choice suggests buying “ugly” fruit and vegetables, avoiding pre-cut items, comparing costs using the unit prices written on shelves, and swapping a favourite brand for a house label.

The Daily Telegraph’s price comparison showed that big savings were available on dishwashing and laundry detergents, as well as olive oil and coffee. According to Choice testing, supermarket brands’ quality has really improved.

MORTGAGES and RENT

A household with a $500,000 mortgage is repaying about $2500 a month right now.

Finding an interest rate that is 0.5 per cent lower will reduce that by more than $120 a month, or $1500 a year. And it is absolutely achievable.

Put the squeeze on your lender, ask for a better rate — or find one elsewhere.

It may be as simple as calling your lender and asking for a better rate. It’s something that should be requested every six months.

But the most significant savings will come from changing lenders.

The Rolfe household did that earlier this year. As of today, we are paying a little more than 2 per cent interest.

For homeowners with at least 20 per cent equity, major lenders are offering rates below 2.5 per cent (that’s not including this week’s increase).

Changing lenders is a pain. But it’s the most significant saving that most people can make.

Renters need to think like a landlord.

When a tenant leaves, a landlord loses income while the property is being re-let.

Sure, vacancy rates are low, but it still takes time to get new people in.

And the real estate agent will take the first couple of weeks’ rent as part of their commission.

Why not offer to sign a two-year lease at just above what you are paying now?

It doesn’t mean you have to stay for 24 months, but you can if you want.

If you’re a good tenant, a landlord may take the deal.

PETROL

Before buying petrol, I use the state government’s FuelCheck app. Most people don’t. There were only 387,00 app downloads last year.

I use it even if I’m in my local area. The cheapest station could be one of three near me.

When I get to the one with the best price, I secretly hope there will be a queue around the corner.

Use the NSW FuelCheck app to find the cheapest petrol near you.

But there never is. I tend to see more people at the expensive servos close by. That is bonkers.

I also try to fill up when prices are near the bottom of the cycle. I don’t wait till my tank is nearly empty. Invariably that leads to paying more.

If you drive a lot, and to different locations, there is even more reason to use FuelCheck before buying and to fill up when prices are at their lowest.

It’s not difficult to save more than $10 per refill, which means annual savings of $500-plus.

POWER

More than 2 million households used the federal government’s Energy Made Easy comparison site last year. That means about 8 million didn’t.

It can be a simple and quick way to compare power plans. I check it regularly. I’ve already changed electricity and gas providers twice each in 2022.

My most recent switch was to a fixed rate for both. Fixed rates — where the price is locked in, typically for a year — are fast disappearing. The best way to compare them is via this fixed rates page at wattever.com.au

The Telegraph does not earn a commission from recommending Wattever. It’s just the easiest way to compare all fixed-rate offers.

Regularly investigate whether you can get a better price on gas, electricity and insurance.

INSURANCE

I recently reduced our car insurance cost by $400 a year by shopping around. I moved from the biggest insurer to the second biggest. The agreed value on the vehicle was the same, as were the other parameters.

There is no simple way to compare all general insurance providers. The most thorough way is to go through cover providers’ online pricing engines one by one.

If you have health insurance, don’t ditch it — well not entirely, anyway.

Instead find a better deal. Cover can be compared at privatehealth.gov.au.

Another way to save money is to get rid of extras (dental, optical and so on). There is no tax penalty for ditching extras but there is for many people if they axe hospital cover.

METHODOLOGY OF OUR SPECIAL INVESTIGATION

To determine how much grocery prices have risen recently, The Daily Telegraph bought the same items as consumer group Choice did last year and measured the increase.

I purchased so much from supermarkets so quickly that the bank suspected someone had stolen my credit card, so it applied a block.

The exercise involved buying a 29-item basket nine times: three were purchased from each of Coles and Woolworths (budget, supermarket brands and well-known labels), plus two from Aldi (budget and supermarket brands) and one from IGA (well-known labels).

If an item was no longer available and couldn’t be substituted in a way that was fair, its cost was removed from the Choice totals gathered last year.

Choice provided these specific costs but was not involved in the comparison.

Only The Telegraph has attempted to measure the current rate of inflation.

Choice’s 2021 survey covered a wide range of locations.

The Telegraph bought all its groceries in adjacent Sydney suburbs within 24 hours.

The non-perishable items were donated to the Addi Road Food Pantry in Marrickville.