Australia is an attractive destination for expats, with many opportunities for career growth and relatively high salaries. Unfortunately, it’s also one of the most expensive countries to live in. If you’re considering a move or have recently immigrated to the country, one way to cut expenses is by saving money on groceries.
At Remitly, we aim to support immigrants with useful tips on settling into their new homes. In this guide, we’ll explain the factors influencing the high prices in Australia and share some essential tips for saving money on groceries.
Understanding Australia’s grocery landscape
Groceries in Australia cost 108% more than the global average, despite the fact that the country grows a lot of its own food. In fact, the nation has so much produce that it sells about 70% of it to other countries.
Australia imports only 11% of its food, which is mostly processed foods such as beverages. You’ll find excellent home-grown produce, consisting of a wide range of healthy and nutritious foods such as potatoes, tomatoes, carrots, lean meats, poultry, fish, eggs, and fruits.
Some might assume that in such a self-sufficient country, food should be cheap. But it’s not. So what’s causing the high food prices in Australia?
Why groceries in Australia are expensive
There are several factors influencing the high prices of food in Australia:
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Oligopoly
Two major supermarkets—Coles and Woolworths—control Australia’s grocery market. This brings about a problem known as oligopoly, where a few large businesses dominate the market.
Usually, other small competitors are in the market, but they don’t offer the same quantities or level of service, pushing customers to use the big businesses. With little competition, these companies have the power to set higher prices and enjoy large profit margins.
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High transportation costs
Grocery suppliers complain that Australia’s large size forces them to spend a lot on transport costs, such as fuel, drivers, and related personnel hours, to transport food. They have to recover this money to make the business sustainable, so they transfer the expenses to customers.
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Increased production costs
Farmers are spending more on fuel, workers’ wages, and fertilizer. The farmers transfer these overheads to those buying food from them to add value or sell directly to consumers. These distributors bear new costs, such as expensive packaging. Again, they pass the expenses on to shoppers to retain their profits.
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Influence from the export market
There’s a high demand for Australian food in the export market. Customers in other countries are willing to pay extravagantly for Australian products, which drives up prices locally as well. If prices were lower in the country, businesses would end up selling most of the food abroad to earn the most profit. Unfortunately, this would make Australia food insecure.
Seasonal trends and sales also affect grocery prices
Grocery prices fluctuate during certain seasons and holidays, increasing or decreasing based on demand. Let’s look at how certain seasons or holidays affect grocery prices in Australia.
Christmas season
Customers spend more than usual during major holidays like Christmas, buying mostly food and gifts. Supermarkets and grocery stores support customers by offering good deals and discounts on holiday-related food items like turkey, ham, pudding, and prawns.
Some shoppers start shopping early, causing supermarkets to introduce sales and promotions earlier than the official holiday season.
Summer
Most fruits and vegetables are cheapest in summer when they are abundant in the market. Customise your menu at home to focus on these ingredients to enjoy inexpensive, nutritious meals.
Winter
Some fruits and vegetables, such as citrus and pears, are in the market in winter. You’ll also see a lot of root vegetables, like potatoes and carrots, as well as legumes such as beans. Hearty, rich soups are a common favourite meal during this season.
Meat seasons
Although meat is available year-round in Australia, each type has a period of peak supply and quality and supply:
- Eat lamb, squid, salmon, and goat in spring.
- Calamari is mainly enjoyed in winter.
- Autumn is a time for beef, pork, and catfish.
- Summer is the time for seafood such as prawns, crab, and tuna.
Smart shopping strategies to save on groceries
To reduce your cost of living in Australia, consider these tips for shopping smart and saving money on groceries.
Make a shopping list and stick to it
Make a shopping list before heading to the supermarket. A shopping list keeps you focused on exactly what you need while staying within your budget.
Install a grocery list application on your phone and use it to create a shopping list. There are free and paid versions—consider free options to save money. Woolworths, Coles, Aldi Australia, and Frugl are popular in Australia.
Use budget planners to track your spending
Budget planners are tools you can use to track your income and purchases, showing you how you spend your money and where you spend the most of it. Consider tools like Moneysmart’s budget planner for Australians.
Learning about effective budgeting methods can help you save more money. Here are a few budgeting tips for your shopping cart:
- Set a realistic grocery budget. There are no specific guidelines on distribution of grocery money because it depends on factors such as your family size, dietary needs, and the cost. It is recommended, however, that you spend 60% of your budgeted amount buying healthy food options like fruits, vegetables, and grains. Spend 30% on animal protein sources like meat, then 10% on beverages and processed foods.
- Review and adjust spending patterns. A budgeting tool offers a few insights into your spending habits, including how much you earned and the percentage of it you spent on different items. Look at these numbers, identify where you’re losing money, and adjust your spending.
- Observe extra but related costs, such as delivery fees and transaction costs. If you’re shopping online or using a delivery service, try to do so less frequently and group your products together into a single delivery to save on fees. Alternatively, opt to pick up at the store, choosing one along your way to work or near the house if you work remotely. Remember that driving a long way to the shop also accumulates costs in petrol.
Check your fridge and pantry before shopping
Your budget and grocery apps will help you to create a shopping list you can use monthly or weekly. However, you’ll realise that you don’t always need to shop for the same items every time.
Non-perishable items can be bought in bulk and kept in the pantry, but buying more fresh foods than you can use creates waste. Throwing away food because it’s gone off before you can eat it is essentially throwing away your money. Check your fridge and pantry before shopping to adjust your list accordingly.
Avoid shopping when hungry
You’re more likely to be tempted by the supermarket’s collection of attractive snacks and make poor decisions if you shop when hungry. Unfortunately, you’ll buy food based on curiosity and temporary cravings rather than what you really need.
If you go shopping with a full stomach, you’ll be more focused and stick to buying nutritious food and items you’ve budgeted for. Sticking to your list will save you money in the long run.
Take advantage of seasonal or holiday deals
A great way to cut costs is by shopping for in-season and holiday produce. Look out for deals and discounts in your grocery store:
- Buy one, get one free
- Bulk purchase discounts
- Holiday bundles—for example, a discount on roast lamb, potatoes, and herbs, which are traditional dishes for Easter
- Seasonal produce discounts—fruits and fresh vegetables are plentiful in summer and are often put on sale to prevent waste
- Early bird sales before major holidays such as Christmas and Easter, designed to encourage consumers to buy early
- Loyalty programs for exclusive deals on seasonal items
- Online and home delivery deals for online shoppers to avoid crowding supermarkets during the holiday season
More cost-saving tips
Even with a budget, shopping list, and discounts, you can use these lesser-known tricks to get the best deal possible.
Switch to generic or store brands
You will likely save more money when you switch from name-brand to generic products. Well-known manufacturers create name-brand products that bear the brand’s label. A generic/store product is not branded or associated with a major manufacturer or producer. This means they save money on advertising and marketing, and can charge less for their products.
Make the most of coupons
Check your store’s website or mobile application for deals and coupons, and take advantage of them. Some stores give out coupons at checkout, which you can apply to your next shop.
To use the coupon, you’ll need to show it to the clerk at checkout. If you’re shopping online, you’ll probably have to enter a code on the checkout page right before you pay.
Embrace ugly produce
“Ugly produce” refers to fruits and vegetables that didn’t grow to the perfect shape, were slightly damaged in transit, or have been on the shelf for a while. Supermarkets sell these products cheaply to encourage consumers to buy them and prevent food waste. Look carefully at the state of the fruit or vegetable, and if it’s still useable, take advantage of the discount.
Buy in bulk
Buying in bulk (purchasing the same product in large quantities) is usually cheaper than buying smaller packages. For non-perishables or staple items you use on a regular basis, this can be a great way to save money and time if your circumstances allow. Remember to check expiry dates when buying in bulk—you don’t want the items to spoil before you can use them.
Consider shopping online
You don’t have to visit the supermarket to shop. Your favourite grocery store probably offers online shopping options. There are several advantages over in-store shopping:
- It saves time. You can shop online during your lunch break at work.
- You’ll easily see all the day’s deals and offers in one place. Here’s an example of Woolworths’ special discounts list.
- Your items will be delivered right to your doorstep. You can also schedule a pickup if that’s more convenient.
- It’s easier to stay within budget. As you add items to your online shopping cart, you can check your total spending and adjust items as needed.
- You can compare prices easily. Shop around for the same items in different stores and buy the cheapest option.
- You can use external websites like Lifehacker Australia to compare grocery coupons available in different shops.
While food may take up a significant proportion of your budget when living in Australia, following these guidelines and tips can help you keep your bank balance healthy. With a little planning and avoiding splurging on unnecessary items, you can save money on groceries without giving up your everyday essentials.
FAQ
Why are groceries expensive in Australia?
High transportation costs, oligopoly, increased production costs, and influence from the export market affect grocery prices in Australia.
How can you reduce your grocery bill in Australia?
Shop online to take advantage of coupons and discounts, plan your meals to include seasonal ingredients, and use coupons from legitimate websites.
What is the 5 4 3 2 1 method for grocery shopping?
This is a method for planning your groceries that involves buying 5 fruits/vegetables, 4 proteins, 3 grains, 2 dairy items, and 1 treat.
What is the cheapest grocery store in Australia?
ALDI and Costco offer some of the lowest prices in the country.
How much should one person spend on groceries per week in Australia?
New South Wales government guidance recommends budgeting about $100 AUD a week per person.