Your next grocery store trip could cost you more, according to experts
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If you've been to the grocery store lately, you surely know by now how much food prices have increased in the past few months.
In fact, prices of basic commodities such as cheese and even the all-Australian delicacy kangaroo meat have been the talk of the town for many shoppers due to their sudden increase.
And while most supermarkets are not yet ready to announce any price movements, reports from experts suggest that those are more likely to come soon – with only more and more price hikes to follow.
Investment bank UBS has done its research to measure the effects of inflation on grocery prices.
UBS's Evidence Lab tracked the prices of more than 60,000 products between two leading supermarket groups, and the results hinted at some concerning developments.
Food price increases averaged 9.2 per cent in the three months leading up to December 31, 2022. Woolworths and Coles have also had higher-than-usual price increases in the past two quarters.
The bank reported that Woolworths had a 8.4 per cent increase in the year up to September, and that amount inflated to 9.3 per cent by December. Meanwhile, its rival, Coles recorded an 8.1 per cent increase leading up to September 30 and closed the year with an increase of 9.1 per cent.
On top of that, the analysts claimed that Woolworths was quicker to raise prices on fresh produce, with prices increasing at 10.3 per cent compared to 8.9 per cent at Coles. Additionally, Coles beat their rival when it came to 'dry' groceries, such as coffee, sugar, and flour, with 8.9 per cent versus 9.2 per cent for Woolworths.
The analysts speculated that Coles' more aggressive discounting could be linked to the varying changes in price, claiming that the retailer may be trying to make up for lost ground compared to its larger competitor.
'Coles is maintaining promotional depth and breadth ahead of Woolworths, arguably reflective of it seeking to differentiate on price as per its period of market share gains in the early to mid-2010s and following market share losses in recent years,' the researchers wrote.
It appears these price increases have been a major contributor to consumer prices across the country, with the Australian Bureau of Statistics revealing a 7.3 per cent increase over the year to November.
In line with the Reserve Bank of Australia and the Federal Treasury, some economists suggest this increase could have peaked at the end of 2022 and prices could start falling this year.
But, unfortunately for consumers, UBS analysts are not expecting to see a reduction in prices any time soon. They warned that food inflation is expected to continue and 'cost pressures remain'.
Updates on fresh food prices
A separate report from UBS released on Monday, January 23 showed that dairy prices have been leading the charge, with a 14 per cent jump over the year to December. The biggest rises were for cheese, which went up 24 per cent, and butter, which rose 18 per cent.
There could be further price increases down the line, with industry body FreshAgenda forecasting a decline in Australian milk production.
UBS analysts noted: ‘We are growing increasingly concerned with the weakness in Australian milk production — (which is down 7 per cent year-to-date).’
‘Industry body FreshAgenda recently released forecasts for a 6-7 per cent fall in the financial year 2023, and an additional 3-4 per cent decline in the financial year 2024 to 7.7 billion litres.’
‘This will likely further intensify an already highly competitive milk procurement market, which has had a negative impact on processors.’
Meat prices are also up, with pork (up 16 per cent) and lamb (up 10 per cent) leading the way. Chicken was up 6 per cent, but it’s still the best value protein on the shelves for consumers.
There you have it, folks! While all of this might indicate that your weekly shop is going to get more expensive, market forces should eventually come into play, and you can take further steps to save too.
Here are our top five tips for making the most of your grocery dollars:
1. Plan ahead: Have a look at the specials and make a plan before you hit the shops.
2. Buy in bulk: Investigate big-box stores for long-life items. If there’s a special and your funds permit you to go beyond your budget, stock up!
3. Look out for deals: Check out the SDC website, catalogues, and newspapers for special deals.
4. Shop smarter: Compare prices of different products and stores. Don’t be afraid to shop around.
5. Make a shopping list and stick to it: Don’t be tempted by deals and discounts that aren’t on your list or you don't urgently need.
What are your thoughts on this? Better yet, do you have more money-saving tips to cope with the rising cost of living? Share them with us in the comments below!
In fact, prices of basic commodities such as cheese and even the all-Australian delicacy kangaroo meat have been the talk of the town for many shoppers due to their sudden increase.
And while most supermarkets are not yet ready to announce any price movements, reports from experts suggest that those are more likely to come soon – with only more and more price hikes to follow.
Investment bank UBS has done its research to measure the effects of inflation on grocery prices.
UBS's Evidence Lab tracked the prices of more than 60,000 products between two leading supermarket groups, and the results hinted at some concerning developments.
Experts warned that consumers might be spending more money on their grocery shopping in the coming weeks. Credit: Pexels/Tara Clark.
Food price increases averaged 9.2 per cent in the three months leading up to December 31, 2022. Woolworths and Coles have also had higher-than-usual price increases in the past two quarters.
The bank reported that Woolworths had a 8.4 per cent increase in the year up to September, and that amount inflated to 9.3 per cent by December. Meanwhile, its rival, Coles recorded an 8.1 per cent increase leading up to September 30 and closed the year with an increase of 9.1 per cent.
On top of that, the analysts claimed that Woolworths was quicker to raise prices on fresh produce, with prices increasing at 10.3 per cent compared to 8.9 per cent at Coles. Additionally, Coles beat their rival when it came to 'dry' groceries, such as coffee, sugar, and flour, with 8.9 per cent versus 9.2 per cent for Woolworths.
The analysts speculated that Coles' more aggressive discounting could be linked to the varying changes in price, claiming that the retailer may be trying to make up for lost ground compared to its larger competitor.
'Coles is maintaining promotional depth and breadth ahead of Woolworths, arguably reflective of it seeking to differentiate on price as per its period of market share gains in the early to mid-2010s and following market share losses in recent years,' the researchers wrote.
It appears these price increases have been a major contributor to consumer prices across the country, with the Australian Bureau of Statistics revealing a 7.3 per cent increase over the year to November.
In line with the Reserve Bank of Australia and the Federal Treasury, some economists suggest this increase could have peaked at the end of 2022 and prices could start falling this year.
But, unfortunately for consumers, UBS analysts are not expecting to see a reduction in prices any time soon. They warned that food inflation is expected to continue and 'cost pressures remain'.
Updates on fresh food prices
A separate report from UBS released on Monday, January 23 showed that dairy prices have been leading the charge, with a 14 per cent jump over the year to December. The biggest rises were for cheese, which went up 24 per cent, and butter, which rose 18 per cent.
There could be further price increases down the line, with industry body FreshAgenda forecasting a decline in Australian milk production.
UBS analysts noted: ‘We are growing increasingly concerned with the weakness in Australian milk production — (which is down 7 per cent year-to-date).’
‘Industry body FreshAgenda recently released forecasts for a 6-7 per cent fall in the financial year 2023, and an additional 3-4 per cent decline in the financial year 2024 to 7.7 billion litres.’
‘This will likely further intensify an already highly competitive milk procurement market, which has had a negative impact on processors.’
Meat prices are also up, with pork (up 16 per cent) and lamb (up 10 per cent) leading the way. Chicken was up 6 per cent, but it’s still the best value protein on the shelves for consumers.
There you have it, folks! While all of this might indicate that your weekly shop is going to get more expensive, market forces should eventually come into play, and you can take further steps to save too.
Here are our top five tips for making the most of your grocery dollars:
1. Plan ahead: Have a look at the specials and make a plan before you hit the shops.
2. Buy in bulk: Investigate big-box stores for long-life items. If there’s a special and your funds permit you to go beyond your budget, stock up!
3. Look out for deals: Check out the SDC website, catalogues, and newspapers for special deals.
4. Shop smarter: Compare prices of different products and stores. Don’t be afraid to shop around.
5. Make a shopping list and stick to it: Don’t be tempted by deals and discounts that aren’t on your list or you don't urgently need.
What are your thoughts on this? Better yet, do you have more money-saving tips to cope with the rising cost of living? Share them with us in the comments below!
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