New tax system and price changes

It is too early to assess the effects of the New Tax System of prices, Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.

"Nevertheless the ACCC has conducted a limited survey of price changes between 1 May and 1 July at about 1500 retail outlets covering a wide range of everyday shopping items.

PRICES SURVEY RESULTS

"About 80 per cent of the products surveyed show price changes within the range estimated in the ACCC Everyday Shopping Guide with about 97% of price increases lower than 10 per cent.

"About one third of prices did not change as a result of the New Tax System changes.

"Price changes due to the New Tax System are generally in line with the ACCC's expectation of the New Tax System.

This preliminary survey provides an early indication of price change trends and will be followed by more extensive price checking.

"There is no evidence that there have been widespread price increases greater than 10 per cent. While the initial results suggest most businesses have been responsible in setting new prices, it is too early to predict the final result for consumers.

"Clothing prices appear to be consistent with price expectations, or in some cases a little below expected price changes. White goods and electrical goods are generally within the expected price range.

"The initial survey indicates that prices of major household appliances such as televisions and videos have fallen as expected.

FOOD

"The initial survey shows that fresh food has risen, which is not unusual for a group which has fluctuating seasonal conditions. For example, apples have risen by about 3.6 % and rump steak about 4.3 %, while potato prices are down by about 3.4% and minced beef fell by 1.3%.

"Processed food price changes are roughly in line with ACCC estimates. Some of the exceptions on early data suggest that flavoured milk has risen by about 2%, rice about 4% and savoury biscuits about 3.5%.

"Take-away food has generally increased in line with expectations, with hamburgers up about 9%. French fries are up less than expected by 6.3%, compared to an anticipated price increase of about 8.9%.

CLOTHING

"Most clothing prices have increased by significantly less than 10%, and are generally within the ACCC expectations, with quite a lot of variability in price changes. For example men's shirts rose by 6.7%, women's hosiery rose by 7.9%, and sports shoes by 2.8%.

"Preliminary indications are that men's jeans appear to be up significantly more than the equivalent women's jeans, up by about 10% for men and just 6% for women.

HOUSEHOLD EQUIPMENT AND OPERATIONS

"Price changes in this category are generally in line with expectations. For example, refrigerator prices fell 1.3%, toasters fell by 0.2%, microwaves are down 0.2 per cent, paint is up 8.3% and washing machines are down about 1.8%.

TRANSPORT

"Motor vehicle prices are not included in this day one survey, but the ACCC has advice from manufacturers and importers that suggest a general price cut of about 6 per cent for new cars on recommended retail prices. There is some variation across makes. Tyre prices have fallen about 3%.

HEALTH AND PERSONAL CARE

"Prices of personal care products sold in supermarkets generally moved in line with expectations. For example, shampoo prices are down 3.6%, soap is down 4.9% and toothpaste is down 3.8%. Some prices that have increased as a result of the tax changes include vitamins up 7.7% and nappies up 8.9%.

"Price changes for pain relief tablets are up about 2.6%, against expectations that these prices would fall slightly.

RECREATION

"Prices of electrical equipment have fallen significantly, as anticipated by the ACCC.

"For example, television prices have fallen by about 5.1%, cameras are down 4.2%, video equipment fell 7.7%, and hi-fi sound systems fell 5.9%.

"Sporting equipment (excluding clothing) price changes in the survey fell on average by 0.5%. Changes in this area will be closely scrutinised in the weeks ahead, as the ACCC would expect larger falls in this area.

"Cinema admission price changes in the ACCC survey averaged an increase of about 5.7%. This lower-than-expected figure suggests that some prices may not have been adjusted at this stage. The ACCC understands that prices of major exhibitors are likely to increase by about 9%.

ALCOHOL

"Price changes for packaged alcohol products showed considerable variation, making preliminary observations difficult. Spirit prices fell about 2.6%, while bottled wine prices increased by about 1.5%. These price changes are generally within ACCC expectations.

"Full strength packaged beer prices increased by about 3%, slightly higher than expected. It is too early to gauge the price change for on-premises alcohol.

HOME OFFICE

"Prices of home office equipment items such as printers, paper and software programs, broadly increased within ACCC expectations. For example, average printer prices fell 3.6%, paper was down 3.1% and software has increased by about 6%".

Professor Fels commented on other aspects of the changes, saying retailers had generally coped well.

PRICE TAGS

"The ACCC is giving businesses a short time to adjust price tags and shelf prices. Consumers may need to be patient, particularly with many small businesses, during this time of price changes as retailers have a big job to change ticket prices and introduce new systems.

"The ACCC expects all businesses to ensure they are charging the correct GST-inclusive price at the cash register from today. To achieve this businesses should have adjusted all scanning equipment for today's trading.

"Businesses are expected to have correct shelf edge price labels as soon as possible, but no later than 10 July and to change all price tags to the correct GST-inclusive price by 1 August 2000.

"The ACCC's own staff survey today of about 100 firms showed that the vast majority of businesses have some signage in their business explaining prices to customers.

"At least half of small businesses have signs explaining their policies while most large businesses are using a range of information tools.

"There are a few signs regarding lay-bys but a number of businesses contacted customers to advise that GST would apply to lay-bys after 1 July.

"Staff seem to be well informed and are giving explanations to customers about price changes at the register;

"There is little use of dual pricing, shops have generally chosen to re-ticket on the day and have signs saying that display prices may differ from actual price. Some businesses are still adjusting prices during the course of today.

A.C.C.C. GST PRICE LINE

"The ACCC GST Price Line [1300 302 502] has received about 1500 complaints and inquiries by 11.30am today. The calls were from both consumers and businesses. The vast number of calls were inquiries which were able to be addressed at the time.

"Many of the inquiries have been about the ACCC's expectations of price movements. The ACCC particularly notes the small number of complaints that had been received by this time. Of the complaints, no particular area of business had received more complaints than others.

"This compares with 3500 calls yesterday by the ACCC Price Line, and is well within the capability of the ACCC GST Price Line".