RateCity
Rising food costs make dents in your savings
Want to learn the smart way to dodge hefty grocery bills? Jack Han reports.
November 25, 2009
Australian food prices are rising faster than any developed nation, according to recent Organisation for Economic Co-operation and Development (OECD) figures. This puts the pressure on Australian households to avoiding letting their grocery shopping damage their savings accounts.
According to the OECD report, Australian food prices have increased 41.3 percent since the beginning of 2000. This is the highest jump recorded, with Spain following with the next fastest price growth over the decade at 41.2 percent.
The UK ranks third at 32.9 percent, while Canada (32.7 percent), Italy (29.7 percent) and the US (28.4 percent) trailed behind.
While experts are criticising our "cosy" supermarket duopoly, Woolworths argues that competition is very healthy in the Australian market.
"We actually think the Australian market is very competitive,” said Woolworths representative James Aylen in an interview with the Seven Network. “We know the ACCC had their inquiry last year and they certainly found it to be competitive as well.”
However, with the canning of Grocery Choice, the consumer group initiative, in June by the Government, it is difficult for consumers to measure competitiveness or compare prices. Households have instead had to rely on traditional means such as saving dockets and waiting for discounts to save on hefty grocery prices.
But the smartest shoppers have realised the importance of savings accounts, and have started to subsidise their monthly grocery costs with interest payments from their savings.
For example, if you put your savings into today’s best savings accounts of up to 5.46 percent, $50,000 saved up would return about $227 in interest every month which is equivalent to about $57 a week. Therefore, if your groceries are normally $100 a week, you could save more than half the cost (before tax).
This strategy could mean sacrificing your spending on a holiday or a deposit on a home loan. However, with interest rates on the rise, and grocery prices hitting every shopper, more and more Australians are happy to enjoy the high interest payments now, rather than collect more debt.
Rising grocery prices are bad news for any household, but that doesn’t mean you should yield to the supermarket giants. Use and build your current savings with a high interest savings account to begin collecting interest, and you could be enjoying a free carload of groceries every week.
Related Links
Previous Story
Financial fitness: Get fit for summer and save money
Next Story
When saving too much is a bad thing
High Interest Savings Accounts
Rate
Earned
