Rising Food Prices and Frozen Pay Hit Households Hard

Most of us are feeling the pinch and tightening our purse strings when it comes to shopping for food, especially if not all of us have seen a pay rise this year.

New reports underlining how household budgets are being squeezed, found that only one in four workers have received a pay rise this year while food prices are continuing to climb.

The CIPD (the Chartered Institute of Personnel and Development) said while three in five people have had their pay frozen, 20 workers had suffered a pay cut since January.

The BRC (British Retail Consortium) explained that food prices were up by more than 5% over the year and shoppers were increasingly looking for bargains – 4 out of every 10 items going through supermarket tills are now on promotion.

As the government spending cuts get under way, three quarters of the public sector workers have been on the brunt of the pay freezes, compared to just over half of workers in the private sector.

“We will see some increase in the number of private sector workers receiving a pay award in the second half of 2011, especially in the retail, catering and hotel sectors, as the increase to the national minimum wage comes into effect in October”, said Charles Cotton, a public policy adviser at the CIPD. This is some good news for some of the lowest paid workers.

According to the BRC and research group Nielsen, food prices in July were up 5.2% year on year, while shop prices overall were 2.8% higher.

Director General at the BRC, Stephen Robertson, said people were forced to change their shopping habits. He explained “People are increasingly taking advantage of promotions to help mitigate against the full impact of inflation, so the effect of food inflation faced by consumers will be less than 5.2%”.

Because of the inflationary pressures in China and the rising cost of imports, restaurant insurance and other supplies, the prices have effected not only prices on the high street but also for restaurants. However, Robertson pointed out that 39% of all supermarket groceries were now on offer. We have also seen an increased number of restaurants offering 2 for 1 deals.

Senior Manager for retailer services at Nielsen, Mike Watkins, said “We have seen sales volumes slow across both food and non-food retailing in recent weeks with shoppers still looking for savings to help pay for increases in other household bills such as transport and energy.

“Retailers have responded with a continuation of price cuts and promotions to stimulate demand at a time when many households are shopping differently to help manage household budgets. Looking ahead, we are optimistic that, whilst prices will still be higher than last year, the rate of increase may start to slow later in the year”.

Have you been looking out for promotional offers on your grocery shopping?

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