Australian cost of living prices have boomed, according to ACM catalogue comparison

It may seem like a mere two dollars here and there, but what are you really forking out for basic household expenses?

ACM compared March and April 2018 catalogues from Woolworths, Coles, Big W and Kmart with online shopping prices from April 2023. We also looked at McDonalds' menus from the same time periods. The comparison included the cost of full-price items, not those on sale.

We found 26 of the most popular items have risen an average of 28.5 per cent over the five years, with just two products costing less than they did five years ago.

ALSO READ:

The ACM analysis of prices showed that basic household items such as washed potatoes (87.5 per cent increase), toothpaste (60 per cent increase), breakfast cereal (59 per cent increase) and dog food (58 per cent increase) had increased the most. The potatoes had almost doubled from $2 to $3.75, a tube of toothpaste went from $5 to $8 and a box of cereal $6.30 to $10.

Other general household staples had seen a rise, with a three litre bottle of milk increasing by 50 per cent, from $3 in 2018 to $4.50 this year.

Freeze-dried coffee ((a 16.65 per cent increase)) was $24, now $28.

Clothing also saw a jump - a basic, plain hoodie is now $15 - was $10 (up 50 per cent) and children's boots were $20, now $25 (up 25 per cent).

Products with the smallest price hikes included rice crackers, basketballs or sporting equipment and Big Mac meals, which went from $11.80 to $12.80.

Interestingly, a loaf of bread had decreased in price by 13.8 per cent, now costing $2.50 a loaf compared to $2.90 in March 2018. Despite rises in alcohol prices, one brand of beer had decreased from $56 to $53 per case.

Ivan Balbuzanov is a senior lecturer in economics at the University of Melbourne. He said inflation of household goods was not matched by rising wages.

"Inflation is driving prices in pretty much all markets," Dr Balbuzanov said.

"We know incomes are stagnating relative to the increase in prices. It means consumers are facing prices that are rising not just in absolute terms, but in terms relative to their income."

The steep increase is affecting the way people shop and leading to increased food insecurity.

The Foodbank Hunger Report 2022 found 21 per cent of Australian households ran out of food at some point last year.

For 64 per cent of families, this was because of higher living expenses.

Another 12 per cent cut down the size of meals. In the same year, only 55 per cent of the population were highly food secure.

"Food insecurity is certainly an issue. People may choose to cut expenditure across other margins. Their housing opportunities may suffer. Some may choose to go without necessary healthcare," Dr Balbuzanov said.

Households with children have been most severely hit. 52 per cent of families with kids were food insecure in 2022, compared with just 33 per cent of total households.

Food insecurity lasted longer than a month for 33 per cent of families with children.

Dr Balbuzanov said continued inflation caused people to buy less of each product, cut down on brand-name groceries or eat at home more.

"If people cook at home more, you may actually get this paradoxical effect where grocery prices are going up, but because restaurant prices are also going up, people are buying more at the grocery store," he said.

The last few years may have hit hard, but cost of living as been climbing for decades.

Continued inflation without a rise in income is a concern for many Australian households.

Only eight per cent of people surveyed in the Finder Reserve Bank of Australia Cash Rate Survey January 2023 has a 'positive' outlook on the Australian economy this year; 39 per cent had a 'negative' or 'very negative' outlook.

And only 45 per cent of Australian households earning between $50,000 - $99,999 could live off their savings for more than one month, according to Finder Consumer Sentiment Tracker, September 2022 - January 2023.

Dr Bulbuzanov said the outlook was particularly poor for those already on the margins, as "the vulnerable become more vulnerable".