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Consumer advocate calls out retailers for price gouging during Covid

Image of woman doing accounting home finance expenses
Image of woman doing accounting home finance expenses

Findings from a nationally representative survey conducted by consumer advocacy group Choice suggest widespread price gouging on essential goods when uncertainty around the coronavirus pandemic was at its peak.

According to Choice’s Consumer Pulse survey, 37 per cent of Victorians and 38 per cent of people in New South Wales reported higher prices on essential goods in late March, when federal and state governments were beginning to implement social distancing rules and force businesses to alter their operations to contain the spread of COVID-19.

Figures were even higher in Queensland, where 40 per cent reported higher prices, and Western Australia, where 45 per cent did so. The combined average for Tasmania, South Australia, the Northern Territory and the Australian Capital Territory was 44 per cent.

The survey was conducted between March 20-29 and asked over 1000 households representing the Australian population by age, gender, state, income and education if prices for essential goods were generally higher than usual.

Freezers are one example of an essential item that became more expensive immediately before and after the national lockdown took effect in March.

Choice’s investigations team compared the price of various freezers from Winning Appliances, Appliances Online and Billy Guyatts between October 2019 and March 2020 and found price increases of more than 20 per cent for several models and an increase of 63 per cent for one model.

The pandemic’s impact on global supply chains – including the shutdown of factories in China in February and reduction in air freight due to international flight cancellations – doesn’t explain the size of these price hikes, according to Choice.

“As part of our research we’ve spoken to supply chain experts who just can’t see justification for the price increases as high as what we saw in whitegoods like freezers,” Amy Pereira, Choice’s campaigns and policy advisor, said in a statement.

When asked to explain the price increases, Winning Group CEO John Winning said the company’s prices are determined by an algorithm; they are not set manually.

“The algorithmic pricing is determined by a combination of factors, including currency exchange rates and the manufacturers product costs. None of these factors were altered during the COVID months,” Winning told Inside Retail.

He also pointed out that the price of other popular products in March, such as stand mixers, actually fell on Appliances Online, and noted that the company offers a price match guarantee.

“We have not engaged in any form of price gouging and any suggestion that we had, would be incorrect,” he said.

Watchdog to take a closer look at price hikes

In March, the Australian Competition and Consumer Commission said it was prioritising its activities on price gouging.

“While price gouging is generally not illegal, if a business makes misleading claims about the reason for price increases, it will be breaching the Australian Consumer Law. It is also possible that extreme price gouging for essential products may amount to unconscionable conduct,” the watchdog said.

Pereira, however, believes this policy needs to change.

“All states and territories need to update laws for price gouging so our consumer protections are fit for purpose in 2020 and beyond,” she said.

“Price gouging in a crisis should be illegal – state consumer ministers can and should act to stop price hikes in future crises.”

Editor’s note: This story was updated on 24/06 at 15:05 AEST to include a reply from Winning Group.

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