Supermarket price rises and 10 ways to save cash

As Aussies face higher fuel prices, these are the next items that will go up in price at the supermarket and how you can still save money.

A fresh wave of price spikes is about to hit Aussie households already struggling with massive increases in fuel costs and higher expenses almost everywhere.

The cost of filling a supermarket trolley has surged in the past year amid pandemic-related supply squeezes, and shoppers are being warned of more rises in the coming months.

However, fuel rather than food is the biggest drain on household budgets after Russia’s invasion of Ukraine sent oil prices soaring, and this inflation will flow through to almost every corner of the economy – with interest rate rises likely by mid-year.

Grocery app Frugl’s analysis of tens of thousands of products at supermarkets Woolworths and Coles has found some huge price surges in the past year, with some food and drink products up more than 50 per cent.

While Australia’s current inflation rate is 3.5 per cent, Frugl Group managing director Sean Smith said the number of supermarket product prices rising more than 5 per cent annually had multiplied.

He said “huge increases” in shipping costs had combined with shortages in key commodities and raw ingredients to increase prices, and natural disasters had affected fresh food.

“As both Ukraine and Russia are major global wheat exporters, we expect bread prices to rise in coming months,” Mr Smith said.

“Increases in some fresh vegetables already being flagged by retailers of up to 75 per cent – driven by both scarcity and cost of fuel on logistics. Other commodities in grocery goods are going to go up as well due to international events – the prices of CO2 in carbonated drinks, the tin used in canning factories.”

A Woolworths spokesman said some prices had changed after wholesale cost increases from suppliers. “We’ll continue to work with our suppliers to sensitively manage the whole-of-market inflationary pressure on food and groceries,” he said.

A Coles spokeswoman said inflation was affecting all retailers but “this financial year we have reduced prices on well over 2000 items across our range of more than 20,000 products”.

Food companies have flagged further price increases, economists predict interest rate rises as early as June, and soaring petrol prices – up 55 per cent in the past year from $1.38 to $2.14 a litre – should remain high.

KPMG chief economist Brendan Rynne said it was going to take until the end of the year for oil prices to fall.

“We are at sustained higher levels of oil costs, which are going to feed their way through to transport costs,” he said.

MyBudget founder Tammy Barton, right, says the inflation journey is only beginning.

Those new price increases were “starting to come through now”, Dr Rynne said.

“it’s going to be the next three months that people will find particularly tough.”

CPI Inflation was likely to rise to about 5 per cent and stay there for the year, Dr Rynne said.

Consumer network One Big Switch’s spokesman, Joel Gibson, said Australia’s 3.5 per cent inflation rate “didn’t pass the pub test” and he is campaigning for CPI to be reviewed.

Mr Gibson said not all prices were affected by oil and the pandemic, “and it all comes down to how many inputs into a product are on that list of things that have skyrocketed”.

“But petrol is driving up the cost of almost everything,” he said.

“The one saving grace is that energy prices seem to be under control for now – if not for that we would be in real trouble. In the UK they have just had a 50 per cent increase in their energy bills.”

MyBudget director Tammy Barton said insurance premiums had jumped alongside groceries and petrol, and household savings would fall.

“We are only at the beginning of the higher inflation journey,” Ms Barton said.

“We may not be able to control inflation, but we can control what we spend our money on.

“For example, can you carpool? Can you take public transportation to save on petrol costs? Are you able to work from home to save spending money on petrol and carparking costs?”

Sarah Naffin with son Eden at home. Picture: Naomi Jellicoe

PRICE SPIKES BRING HOUSEHOLD CHANGES

Surging food and fuel costs have prompted a change of behaviour in Sarah Naffin’s household.

Ms Naffin said price rises have been particularly noticeable in the past few months and she doesn’t expect inflation relief any time soon.

“We have noticed it in some of our general staple items like orange juice and fruit and vegetables – they have gone up a considerable percentage,” the 45-year-old said.

“We normally do our shopping at one supermarket but now we are reviewing what’s on special at the major chains, and we seek out those things that are on special.”

And like almost every other motorist is experiencing, the petrol price pain has been harsh.

“We use (app and crowdsourcing website) Petrol Spy to try and get a bargain, but even then there’s no such thing as a petrol bargain anymore,” Ms Naffin said.

“We are trying to be wise in our use of our vehicle,” she said. That means using more public transport and working from home where possible.

“Then there’s the risk of interest rates going up. And housing prices have gone crazy, which means councils are going to be getting new property valuations. Will people’s council rates spike by 40 per cent because house prices increased?”

Kelly Hekkenberg shopping with kids Austin and Aria. Picture: Sam Ruttyn

FUEL PRICE “GETTING RIDICULOUS”.

Mother-of-two Kelly Hekkenberg has seen an increase in the price of her shopping, spending up to $600 on groceries and household essentials a week.

“We do have a budget and we’re lucky that we’re able to manage and stick to it, but I’ve definitely noticed a rise in the cost of items,” she said.

“My partner and I decided to cap our petrol at $100 a week because the price of fuel is getting ridiculous.”

10 WAYS TO HANDLE HIGHER PRICES

1. Take a closer look at your living costs, checking banking transactions to spot expenses that may not be necessary. Where prices have increased, adjust your budget.

2. Examine the unit price or products at supermarkets to get the best value for money.

3. Use petrol price apps to find the cheapest fuel in your area – most metropolitan markets move in price cycles where there can be 30c swings.

4. Technology such as money-saving apps and comparison websites can help you find better deals, bigger discounts and areas where you’re wasting money.

5. Shop for local and seasonal produce where you can, to help local businesses and save on transport costs, and be flexible when buying to take advantage of available supply.

6. Review debts, consolidate high-interest loans and consider refinancing your mortgage, which MyBudget’s Tammy Barton said could save $400 a month.

7. Insurance is vital but you may save money by bundling policies with one insurer, paying upfront annually if it attracts a discount, and checking if extras are necessary.

8. Can you supplement your income by taking on part-time work or starting a side hustle?

9. Look at what lifestyle costs you can potentially trim, but don’t give up on all the things you enjoy, Ms Barton said.

10. Don’t fear the worst-case price rise scenarios: “sometimes it’s businesses buttering us up so we will accept them more easily,” One Big Switch’s Joel Gibson said.

Source: Frugl, MyBudget, One Big Switch

Cherie and Leland Pasion with their boys, Juan, 9 and Diwa, 4. Picture: Zak Simmonds

BIG JUMP IN SHOPPING BILL

For Cherie Pasion, filling up the shopping trolley at Aldi to feed her family used to cost $250, but in recent weeks that has jumped to $300, and she is now considering a diet that can bring the price down.

“In the last couple of weeks it’s been very noticeable,” she said.

“I came home and said to my husband that we’ll probably primarily be eating vegetarian going forward, to just try balancing that budget.”

But it’s when Ms Pasion fills the car up with petrol that she feels the pinch the most.

With her two boys’ school 25 minutes away and no public transport available, paying for fuel is essential.

“(Before) we’d probably be looking at $400 a month on petrol and now we’re seeing quite a rise, you know, we’re probably losing about $150 in a month.”

Ms Pasion said she was sympathetic to the world’s events influencing these prices, but said she was merely responding to the impacts.

“Do I change how we eat?” she said.

“I’m even thinking about my child’s school. Do we even change schools so it’s closer if this is going to be a long-term thing? It is impacting our bigger decisions.”

– Tricia Rivera

Originally published as Supermarket price rises and 10 ways to save cash