Friend was looking for an insinkerator E20 - Bunnings has it for $199 online. Mitre 10 has it online for $200. I told my friend to go to Mitre 10 and use their price guarantee to get it for $169.15.
Friend goes to Mitre 10 and the instore price is $199. D'oh. He bought it anyway to save an extra trip to Bunnings (plus he gets airpoints).
This is not the first time I've noticed this - I've been caught out a few times now looking at the online prices and shooting down to Mitre 10 only to find the instore price coincidently happens to match the local bunnings price.
If the price was the same, I'd rather support Mitre 10 anyway, being locally owned, but still get that feeling of disappointment going down there hoping to get another 15% off. It's annoying that they can't just advertise the right price online given it's only $1. I do wonder if this is a deliberate ploy which cleared worked in this case as they got a sale out of it.
Is it misleading advertising/prices when their instore price is lower than advertised?

This happens because they are either actively monitoring the price, or they have already priced matched.
It's a good thing. It means they're at least attempting to deliver on their "price promise" (or whatever). Compare to somewhere like EB Games who have a price match, but happily continue to charge $100 when elsewhere are charging $30.