Carbon tax, day 2 with no price increase; ABC

Good old government media, the ABC has rushed into a report on the impact of the carbon tax on the second business day after its imposition. Coming up with the glowing verdict that prices are unchanged, they ignore the fact that it takes time for price rises to show up at the retail level:

At the two small supermarkets in Homebush, the carbon tax has not changed things much. This week FoodWorks was actually a bit cheaper. Eggs were more expensive but lower prices on bread and tomatoes more than made up the difference.

Ryan Smith from FoodWorks says he is not surprised. "Absolutely nothing as yet about anything type of tax price increases on any item," he said. He also ruled out any increases just because it is the start of a new financial year and shops can adjust for inflation.

Around the corner at the IGA the only difference was cheaper tomatoes. Store manager Christian checked his list of weekly price changes this morning and did not find anything out of the ordinary.

"No there appears to be no difference to my normal weekly price increases. There's no major impact at all that I could see today," he said. He says no suppliers have said there will be price changes due to the carbon tax.

The same goes for the local fruit and vegetable shop, although the manager there has a few concerns. "Eventually we'll have to pass on the price increase to the consumer," the manager said. "[Suppliers] haven't said such as yet but I mean it's obvious they will increase the prices.” …

Food items, especially fresh produce has little leverage in the market and producers have good reason to worry that they will once again (or in some cases, remain) the meat in the grinder. Given the strong competition in the marketplace, there is a fair chance that chain stores will opt to lower returns to farmers rather than raise them to the consumer.

The government has made it known that their agents will be out looking for ‘unreasonable’ price increases blamed on the carbon tax, which will be an added incentive for retailers to squeeze producers to keep prices down. Over the last year some of the most efficient dairy farms in the country have gone out of business owing to lack of profitability without this imposition. More will follow.

Producers in more heavily populated areas will be able to flog off their properties for hobby farm/ lifestyle blocks, but those further out have limitations on this.

Governments need to understand their limitations. They for instance, do not have the ability to improve the climate by their favorite mechanism.