The True Extent Of Food Price Rises

Everyone's talking about the increasing cost of food. But how much have grocery bills really gone up? And how badly could your wallet be hit?

This week's announcement by the Bank of England that inflation has hit 3.3% -- and could top 4% before the year is out -- spells more bad news for struggling Brits.

According to Mervyn King, the governor of the Bank of England, the main factors fuelling the rise are increasing energy and food costs -- both of which have been the focus of almost endless discussion over the past few months.

On the same morning that inflation figures were released, some newspapers and websites reported that the cost of an ‘average' family's shopping basket has soared by almost 20% during the past twelve months.

But have prices really leapt so high? And how badly could they affect your budget?

Counting The Cost

The cost of certain foods has risen dramatically in recent months.

Buying a bag of whole wheat pasta a few months ago, it suddenly hit me that the 87p price tag was more than twice what I used to pay for the same product.

mySupermarket.co.uk, a comparison site that allows customers to check prices from Tesco, Ocado, Asda and Sainsbury's, released research this week which seems to confirm consumers' worst fears.

The study suggests that the cost of 24 ‘staple' food items has increased by an average of 21% since June 2007.

Here's a summary of some of its main findings.

Source: mySupermarket.co.uk. Research based on comparisons between prices of the most alike products at Tesco, Asda and Sainsbury's stores.

It's easy to see that the cost of many foods Brits eat has rocketed since last year. Some of the price rises -- such as for pasta and rice -- are truly shocking.

During the course of compiling this data, mySupermarket also found that the three supermarkets surveyed had not hiked prices at identical rates.

While buying the 24 ‘test' items from Asda would cost 26% more now than in June 2007, in Sainsbury's a customer would have to part with 21.1% more. Tesco came out on top, passing on a smaller price rise of 16.2% to its customers -- but mySupermarket points out this may partly be due to temporary ‘special offers' on certain items.

How Bad Are Things For Me?

According to mySupermarket, the impact of price rises on a family of four (spending around £100 per week on food) could be significant. Over a year, the cost of their food might increase by £1092.

However, data like this doesn't provide an entirely fair picture of how food prices could affect the public. According to research from TNS Worldpanel, the ‘typical' family supermarket spend of £100 per week is too high.

Its data suggests that only one in ten households spend £100+ per week on groceries -- which means that, for 90% of us, mySupermarket's predictions are overestimates.

TNS Worldpanel studies have found that the average weekly spend on food and drink is actually more like £50. Therefore, price rises will still prove painful -- but, for most people, they won't be as hefty as some headlines imply.

Another point worth noting is that not every shopper buys the 24 ‘staple' items generally price-checked by researchers. TNS Worldpanel suggests that people buy a wide variety of foods.

As some food prices have remained constant or have even decreased during the past year, this could further reduce the impact of price rises.

Ultimately, I'd say it's incontrovertible that food is becoming more expensive. What I think is questionable is the extent to which prices have risen, and the exact amount price rises could cost individual households. These things depend on how much -- and what -- you buy.

In my opinion, the only reliable way to tell how much food costs are increasing is to keep an eye on them yourself.

What Can I Do?

Here on The Fool, you'll find plenty of tips on reducing your grocery bills. Serena Cowdy and Malcolm Wheatley have both written popular articles on how to cut costs.

I can honestly say that internet shopping has saved me a packet over the past few months. Selecting my groceries from the comfort of my couch means that I never shop hungry, and I avoid being sucked in by special offers on posh products I don't need.

Better still, I always make sure I cancel out supermarket delivery charges by searching for a valid discount code on a forum such as HotUKDeals.com. This week, I saved £10 at Tesco... And I didn't have to miss EastEnders to do my shopping!

Food price rises look like they're here to stay -- so, however badly you feel you'll be affected, now's the time to start cutting costs in the way that's best for you.

More: Three Ways To Cut Your Food Bill | Fight Back Against Rising Food Prices | Ten Ways To Cut Your Food Bill