Cost of living pressures have increasingly impacted Australians over the past 12 months. Finder’s Cost of living report 2023 reveals that the rising cost of basic living costs are putting Australians under significant pressure. This includes petrol, health care and, most importantly, food.
In fact, skyrocketing costs of food have now become one of our biggest money worries. Why is the rising cost of food creating such an impact on Australians? Because it represents a big part of our overall consumer spending and our discretionary spending – especially when our money is also being spent on other fronts (such as rising interest rates).
Let’s find out more, and what steps you can take to help.
Finder Cost of Living report
Finder’s Consumer Sentiment Tracker surveys Australian consumers each month. It identifies which three of nineteen different household expenses are causing the most financial stress. Australian consumers most commonly name rent / mortgage, groceries, petrol and energy costs as the top contenders. But this year, food has played an even more prominent role.
Key results from the Finder Cost of Living Report for March 2023:
- 94% of respondents to the survey reported an increase in their weekly grocery shop, spending an additional $37 each week on groceries.
- 43% of respondents were stressed about the cost of groceries (up from 23% in March 2021); 42% were stressed about the cost of housing; 26% about the cost of petrol and 23% about energy costs.
- In December 2022, Australian households were paying 7.8% more for goods and services than in December 2021.
- Cash rate increases have added over $12,000 to the annual cost of servicing a $600,000 mortgage.
- 429,000 Australian households missed a home loan repayment in the second half of 2022.
Cost of food
According to Finder’s CST, in February 2023, the average Australian household spent $185 on their weekly groceries. This was an increase of $37 since February 2022. This weekly increase, in addition to other rising household costs, is impacting Australians’ financial security.
According to the Australian Consumer Price Index (CPI) for the December 2022 quarter, Australia experienced the highest annual CPI movement (7.8%) since 1990. Higher prices for food, petrol and construction of new houses have been the main drivers for increased inflation.
In the December quarter, grocery prices (not including fresh fruit and vegetables) were approximately 11% higher than 12 months earlier. This is the highest annual growth rate since 1983.
Driving factors behind cost of food increases
The driving factors behind the cost of food increases (as well as general retail cost increases) are:
- Covid 19 impacting supply chain issues.
- Impacts of the war in the Ukraine on energy and fertiliser prices.
- Australia’s unpredictable and unstable weather over the past two years.
The bad news is that these aren’t factors within the average Australian’s control. But the good news is that there are some steps you can take to help.
How to combat skyrocketing costs of food
Until cost of food and other household expenses start to decrease, here are a few ideas to reduce your grocery bill:
- Create a weekly meal plan. Writing your shopping list from the meal plan will help to minimise impulse purchases.
- Reduce your food waste. The cost of food waste to Australian households is estimated to be between $2,000-$2,500 annually. If groceries cost around $185 each week, this is more than ten wasted household grocery trips each year! This money could be spent reducing your household debt or paid towards your home loan to get it paid off faster.
- Purchase non-perishable grocery items in bulk so your cost per item is reduced.
- Use leftovers from your evening meals for breakfast, lunch or dinner the next day.
- Keep an eye on prices and buy your shopping list items on sale when you can. Buying fruit and vegetables in season should also ensure they are priced as cheaply as possible.
Next steps for Australian consumers
The household budget impact of cost of food, inflation, cash rate rises and increase in other living expenses has hit Australians hard. At Lending Loop we suggest that the best way forward is to focus and act on what’s in your control.
Create and stick to a budget, so you’re aware of exactly what’s happening with your money and where it’s going. When you’re clear on your essential and discretionary spending habits, you can be proactive about reducing your daily living expenses.
Your household debt, including your mortgage, other loans, and credit cards, is an area we can help with. We can conduct a home loan health check and consider whether you could refinance to a mortgage product with a lower-interest loan, or consolidate debt into one loan.
Even a small decrease in your home loan interest rate can have a big impact over time. Finding the most cost effective financial products for your circumstances might help reduce the financial stress experienced by your household.
We’re here to help!
Our expert Lending Loop team is here to help. When you’re ready for a home loan health check or to explore refinancing, get in touch. We can help find the best home loan products from over 40 of Australia’s biggest banks and specialist lenders. Reduce your financial stress, and keep more money in your pocket. Give us a call today at Lending Loop.