Frugal food shoppers economise and make trade-offs to tackle inflation, says Deloitte

Rising prices are making consumers around the world increasingly frugal, with some only buying essentials and others purchasing lower-cost meat and ingredients to manage spiraling food inflation, according to a new report by Deloitte.

As global food prices continue to spike, little has changed according to accounting firm Deloitte as consumers surveyed earlier this year in January are still as frugal as in late 2022.

The report ranks 23 countries using Deloitte’s Food Frugality Index (FFI) capturing “longitudinal change across six cost-saving behaviours,” said the authors. These behaviours were found to have a particularly strong connection to consumer frugality.

Many consumers have adopted the ’economise’ approach”, making efforts to reduce their food waste and shopping based on food already at home, only buying essentials, or buying less than wanted. One in five surveyed as part of Deloitte’s Global State of the Consumer Tracker in January left the grocery store in a period of two weeks buying less than they wanted to. Others are making ‘trade-offs’, a strategy used to keep the trolley full and supermarket costs down, by purchasing mainly store own brands or lower-cost meat cuts and ingredients.

From food frugality to food insecurity

“This behaviour goes beyond mere food frugality and could hint at the presence of food insecurity. The figure sits relatively high across a number of developed economies, including France (24%), Italy (21%), Germany (20%), the United States (18%), and the United Kingdom (19%)”.

Food frugality is particularly high in the UK. Each country has a different FFI likely to be driven by local economic conditions such as inflation trends.

“While overall inflation has decreased since October in the United Kingdom, food inflation hasn’t followed suit – it rose by 16.8% in December 2022, marking the biggest annual jump in food prices in the country since 1977,” said Deloitte.

In the US, year-over-year inflation rates for food eaten at home increased more than 10-fold over the last 18 months ending December 2022. Australia’s inflation rates are still rising and its FFI values “suggest consumers are increasingly on the defensive”, said Deloitte

Rising inflation, shrinking food

Amidst rising inflation, Dutch consumer rights group Foodwatch has asked consumers to flag brands and food manufacturers for “devious” shrinkflation practices. With rising ingredients costs and shortages, consumer products are reducing in weight, size, or quantity but prices are staying the same or even increasing.

© AdobeStock/Chaay_tee

“This lack of transparency is unacceptable. As a consumer, you are deliberately being misled about the changed content and price of many solid food products that you are used to buying. Especially in times of high inflation, this practice can be called outrageous,” said Foodwatch.

Consumers are noticing shrinkflation in top categories including snacks, breakfast cereals, tea, biscuits, and soft drinks, according to data collected by Foodwatch.

Food frugality is exceptionally high among lower-income households

Frugality varies by income, however those with less money are increasingly frugal. In the US, from September 2022 leading into Christmas, “easing frugality among lower-earning Americans helped drive down the overall US score”, said Deloitte.

Signs of frugality can also be observed in middle-income consumers and, whilst higher earners are less likely to follow all six cost-saving behaviours, they show unique patterns such as buying more own label products as opposed to name brands.

“[Supermarkets] should understand how these frugality behaviours are playing out in their own stores and pass on that data to their [consumer packaged goods] CPG suppliers. Understanding the extent of price push-back and where it’s happening could help in decision-making and pricing contract negotiations. When possible, brands should share their price advocacy efforts with customers.”