Background Tobacco companies may attempt to minimise the impact of tobacco tax increases on consumers by gradually passing on the price rise over several months. This study examined whether there was evidence of large Australian tobacco retailers engaging in this practice (known as cushioning) over a period including both routine indexation and large annual tobacco excise increases.
Methods Advertised prices of nine factory-made cigarette (FMC) and nine roll-your-own tobacco (RYO) products were recorded from two stores monthly from December 2016 to December 2019. Per cent change in price from the previous month was analysed for FMC and RYO products, controlling for year, month, tobacco company and supermarket chain.
Results Significant main effects of month were observed for FMC and RYO products (both p<0.001). Large, significant average increases in per cent change in price were observed in September for FMC (6.51%) and RYO (11.45%) products, the month of the annual excise increase and prices also significantly increased in October (FMC: 3.01%; RYO: 1.91%). Significant increases were also observed in the months after the March annual routine indexation: by 1.10% in May for FMC products and by 1.09% in April for RYO products.
Conclusion This study has demonstrated evidence of cushioning of tax increases of FMC and RYO products in large Australian supermarkets. The monthly per cent change in price significantly increased several months after routine excise indexation and in the 2 months following a large annual excise increase. Further research with a larger sample of products and stores is needed to confirm these findings.
- tobacco industry
- surveillance and monitoring
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Contributors MS and MB designed the study. MB collated data, conceptualised and undertook the analysis and drafted the manuscript. All authors contributed to editing and finalisation of the manuscript.
Funding This research was supported by funding from the Cancer Council Victoria and by the Australian Prevention Partnership Centre through the NHMRC partnership centre grant scheme (Grant ID: GNT9100003) with the National Health and Medical Research Council (NHMRC), Australian Government Department of Health, ACT Health, Cancer Council Australia, NSW Ministry of Health, South Australian Department for Health and Well-being, Tasmanian Department of Health and VicHealth.
Competing interests None declared.
Provenance and peer review Not commissioned; externally peer reviewed.