Australian shoppers are rapidly changing their spending habits as the spiralling cost of living puts pressure on wallets.

An overwhelming 93 per cent of Australians are concerned about the effects of inflation, with the cost of household bills, food and groceries, petrol and housing topping the list of worries, according to consumer researcher Circana.

Shoppers are changing their habits, looking increasingly for more value for money.

Brand loyalty is waning, with 69 per cent of Australians likely to switch to another brand that offers appealing features or benefits; two-thirds of shoppers believe that home-brand products are a good alternative to name-brand products, and more than half have tried a new shop or brand due to perceived value.

Shoppers are increasingly making unplanned purchases so they can buy products on promotion, while value trumps sustainability as consumers are less likely to pay a premium for eco-friendly products.

Brian Walker, chief executive of Retail Doctor Group, said inflationary pressure had brought a migration to the value-end of the retail sector, with consumers spending less on discretionary items, and comparing prices more often across retailers on essentials such as groceries.

“Categories that were more challenged in the March quarter were the great success stories of COVID; furniture [and] electronics were two standouts, [but] they’re obviously doing tougher,” he said.

In response to subdued consumer enthusiasm, and with a growing awareness that loyalty isn’t guaranteed if there are better prices on offer elsewhere, he said brands and retailers were advertising more aggressively – a move that often proves unpopular with consumers.

Prices could deflate

The Consumer Price Index indicator rose 6.8 per cent in the 12 months to April, with food and non-alcoholic beverages among the biggest contributors to the hike.

But some relief may be on the way.

Mr Walker said there were signs of deflation in the supply chain, although possible future cash rate hikes could dampen any benefit to consumers.

“My general read of [whether prices will come down] is we’ve got more of the same for another six or seven months, at least,” he said.

“Then … if I was a gambling man, I’d hope to see pressure coming off cost of goods and pressure easing back from inflationary contexts.”