Woolworths receipts survey reveals true grocery bill inflation

A deep dive into an average supermarket store has unveiled a big problem facing everyday Australians – but just how bad is it going to get?

Everyone talks about grocery prices. They are standing. The totals we see at checkout are higher than ever. But by how much?

Official data indicates that groceries increased by 4.2% between December 2019 and December 2021, excluding tobacco and alcohol. That’s a little slower than headline consumer price inflation, which rose 4.39% in total over two years.

But that’s not what I hear. People are under the impression that their grocery bills have gone up way more than the official numbers. The word inflation literally means rising prices. Thus, the consumer price inflation index is supposed to accurately represent price changes. Is that the case ?

I talk to a lot of people who think the inflation data is wrong. Some people think that’s a mistake. Some think it’s a conspiracy.

The Bureau of Statistics goes to great lengths to ensure that the CPI basket represents what the average person is buying. They pay attention to pack sizes and adjust price changes based on pack size changes, etc. They are very professional and independent from the RBA, which sets the interest rates. They should do it right.

Here’s what they’ve seen over the past two years.

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Of course, the overall CPI is an average. It covers average purchases for the average person. This includes some things that have increased, others that have remained stable. But we are all unique. If you spend a lot on chicken, Weet-Bix, and fruit, your personal inflation experience is likely low. If you’re spending a lot on beef, vegetables, and cigarettes, well, you’re in the other situation.

Skyrocketing cost of living

Last week a an extremely popular online post has come to my attention. One person posting on Reddit claimed his grocery bill was “skyrocketing.”

“I feel like I’m losing my mind,” the person said. “Over the past year and a half, after buying EXACTLY the same things every week, my total bill has gone up at least 25%, closer to 40% for some products…I’m literally getting poorer to live on exactly the same way.”

Is it really possible, I wondered? Official statistics say it is much less. The person did not bring any actual numbers to the discussion. Could they forget how much the groceries cost? May be. Or maybe, I told myself, I trust official statistics too much. I should check against reality. So I set out to see what was real.

reality check

I mainly buy my groceries online at Woolworths, which means I have a lot of receipts on my computer. I decided to pull out all the receipts since the start of 2020, and of course I’m spending more now.

As the following chart shows, in 2020, I did several online stores that cost around $160. At the time, I was spending less than $200 about a third of the time. But my last five stores have all been over $250. What is going on? Is this proof that prices are rising? Or is it something else?

Am I spending too much on groceries? It seems like a lot.

Part of the answer is that I buy more. Before the pandemic, I used to go to Aldi about once a month and stock up on sustainable goods – preserves, cheese, etc. Now I buy almost everything at Woolies. The number of items I put in my cart has gone from around 45 to almost 60. Part of that is because we’re eating more at home. But we also had two children during the pandemic, which definitely affects my purchases!

Still, people buying more items are consistent with what Woolworths itself has said. In their latest sales update, they said they were seeing “items per cart” increase by 10% (although this was a while ago – spanning July, August, September 2021).

Is this the full explanation? It’s time to look at some real prices.

Here’s a chart showing my big items, the ones I’ve spent at least $80 on over the past two years, ranked by how much I’ve spent.

Many of them have gone up – my top five items include three that have gone up, none have gone down. In this list, only two items have dropped in price during my shopping experience: tofu and broccoli.

It’s the price changes that matter the most, because they’re in the categories I spend the most on. About half of the items have not changed in price. But there are huge increases in there that affect my grocery bill.

The price changes above are taken from my actual purchase receipts, so they don’t all correspond to the same time periods. I’ve made this clear in the chart – some are comparing a price from the start of 2020 to today, others are comparisons over shorter time frames. The percentage change compares the first time I bought the item to the most recent time, not a yearly change – so be careful comparing it to inflation.

Another reason to take all of this with a grain of salt is that if the prices go up a lot, I might stop buying the item! I definitely eat a little less beef now.

Here are some of the things that have increased the most. These are things I bought despite the price going up. What you’ll notice is that it’s mostly healthy food – I think that’s why inflation hurts so much, because it’s in fresh, healthy produce – produce that we are supposed to buy.

(Things fall into this chart if I’ve bought them at least four times, at least 12 months apart, they’ve gone up at least 15%, and the pack size hasn’t changed. Eagle eye might notice there’s one line I couldn’t put a label on – it’s Philadelphia cream cheese.)

To be fair, here’s the stuff that fell. Again, these are things I’ve bought at least four times, at least 12 months apart, that have dropped at least 15%, and the pack size is consistent. Some are also healthy foods, but this category includes slightly more processed foods.

The real story of inflation

Food price inflation is real. The official data hasn’t captured the latest moves, but when it comes out (late April) it will confirm what people are feeling right now: prices are rising as 2022 begins.

Some people experience even worse than average inflation. The person who says prices are “skyrocketing” is not necessarily the person represented by the CPI basket. A lot of people do it hard. The prices aren’t going to drop anytime soon either. What we have to hope is that wages will soon start to rise to compensate.

Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.

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