Groceries taking a bigger bite out of household budgets

Myron Jobson, senior personal finance analyst, comments on the latest ONS food price inflation, energy bills and rent statistics.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Going to the shop for groceries is taking a bigger bite out of household budgets amid soaring prices. The headline CPI inflation figure dramatically underestimates the extent of real-world food inflation, with some everyday larder products such as vegetable oil, pasta and tea rising by 65%, 60% and 46% in the year to September. And many items that have not risen in price are shrinking in size. Known as shrinkflation, it means we are paying the same price for a smaller product.

“Part of what’s fuelling the headline inflation figure are astronomical price gains in food. This type of inflation can be sticky because consumers are resigned to paying it as they form part of essential expenditure. Orange juice, minced beef, sugar and rice were the only staple items to see their prices fall over the same period.

“Those on the breadline struggle most with rising food prices as they spend a greater proportions of their incomes on food and drink than those further up the income spectrum. With many of us opting against receiving receipts at self-checkouts, it is difficult to keep track of price rises – supermarkets aren’t likely to shout about upping prices. It is also hard to notice price increases and budget for them when they go up in small increments over a stretch of time rather than a sudden jump.

“It is interesting that more of us are turning to own-label products to reduce the grocery bill, but the cost benefits of switching to lower-priced store brand equivalents wane when prices are rising across the board.

“The headline grocery price inflation figure can dramatically differ from your own personal inflation number. As such, it is worth keeping tabs on your spending habits to get a better idea of the goods and services that are eating most into your budget, and where you could cut back.”

Struggling with bills

Myron Jobson says: “While the cost-of-living crisis affects us all, official figures show that it does not affect us equally. Four in 10  White adults reported finding it difficult to afford their energy bills compared with over two-thirds for Black or Black British adults and around six in 10 for Asian or Asian British adults.

“These statistics are likely a result of a number of complex and interlinking factors, such as differing demographics, with some groups younger on average than others, and levels of employment among the different groups.

“Disabled adults are also feeling the cost-of-living crunch more acutely. More than half of disabled adults reported finding it difficult to afford their energy bills and around a third (36%) found it difficult to afford their rent or mortgage payments compared with 40% and 27% of non-disabled people respectively. These statistics point to some very worrying trends and deserve a closer look.”