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Pricing policy needs teeth if it's to really benefit consumers

By Nicole Rich and Sean Carroll - posted Wednesday, 8 July 2009

Supermarkets must not be allowed to hijack the unit pricing scheme.

With the Federal Government abandoning Grocery Choice, it is now even more important that it puts in place an effective unit pricing regime that works for consumers.

Laws mandating a national unit pricing code come into force today and must be fully implemented by Australian supermarkets by the start of December. Unit pricing is the display of grocery prices as amounts per standard units of measurement (such as per kilogram or litre) in addition to the selling price. For example, a 750 gram pack of flour selling for $2.10 would also display a unit price of $2.80 per kilogram. Unit prices, which have been in place in America and Europe for years, allow shoppers to compare the relative value of different package sizes, brands and product alternatives quickly and easily.


Conservative estimates suggest that unit pricing could save consumers $810 million each year, while recent Australian research shows that people could reduce their grocery bills by as much as 47 per cent.

Unit pricing is long overdue in Australia and any reform that will help cut what is for most households one of their largest weekly expenses is welcome, particularly in the present economic climate. But the Government's new code will not work unless the unit prices are easy for shoppers to notice, read and use. Some key aspects of the code will significantly undermine its effectiveness in this regard.

For instance, the code requires unit prices to be displayed per 100 grams or 100 millilitres instead of per kilogram and per litre. Using smaller units makes price differences appear less valuable and makes comparisons more difficult, meaning consumers are less likely to use the information. Per kilogram and per litre measures are also used intuitively by consumers. There were no cost or implementation reasons to adopt smaller units as the standard, although supermarkets strongly argued for this approach.

The new code also fails to specify minimum sizes for the display of unit prices. Instead, it requires that unit prices be "prominent", "legible" and "in close proximity to the selling price", leaving interpretation to supermarkets. Judging by piecemeal efforts by supermarkets to display unit prices, it is likely they will try to display them as small as possible. This will make it difficult for many shoppers to notice or read the unit prices, particularly on bottom shelves.

If the Government is serious about using unit pricing as the new cornerstone of its approach to tackling high grocery prices, it now needs to tackle these and other outstanding concerns.

The most important unfinished business is a public education campaign covering what unit pricing is and how it can be used.


Unit pricing is new and introducing it without efforts to increase consumer awareness will doom it to failure. Critically, shoppers need this information at the time they will actually use it - while shopping.

The Government has seemed reluctant to require supermarkets to display posters and distribute information pamphlets, suggesting that an Australian Competition and Consumer Commission campaign will suffice. Experience demonstrates that it won't, and the Government must ensure that quality information is displayed in supermarkets as has been done overseas.

There is also no point in introducing a unit pricing code if it is not adequately monitored and enforced. The ACCC is the right regulator for this job but it needs the right tools. It is not realistic to expect the ACCC to initiate court action seeking an injunction every time there is a breach of unit pricing requirements and supermarkets will know this.

The Government recently introduced important changes into Parliament to give the ACCC more flexible enforcement powers, but has excluded the unit pricing code. This must be remedied before the new bill is passed so that, in particular, fines are available for breaches that would not justify large public expenditure on investigation and court action, but have nevertheless caused harm to consumers.

Now is the time for the Government to step up to the plate and deliver effective grocery reforms for the benefit of all Australian households.

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This article was previously published on July 1 in The Age

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About the Authors

Nicole Rich is director of policy and campaigns at the Consumer Action Law Centre.

Sean Carroll is the policy officer at the Consumer Action Law Centre

Other articles by these Authors

All articles by Nicole Rich
All articles by Sean Carroll
Related Links
Consumer Action Law Centre

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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