Retail electricity prices are expected by rise by 50 per cent over the next two years, dealing households and businesses another cost-of-living blow.
Treasury has assumed in the federal budget that retail power prices will increase by an average of 20 per cent nationally in late 2022, and a further 30 per cent in 2023/24.
The department expects the rise in wholesale gas and electricity prices to flow through to higher prices for consumers.
“Higher electricity prices will have both a direct and indirect impact on inflation,” the budget papers state.
“Commonwealth and state government actions to accelerate the uptake of renewables and modernise the grid are expected to put downward pressure on wholesale electricity prices over time.”
Domestic wholesale gas prices remain more than double their average prior to Russia’s invasion of Ukraine.
Treasury expects retail gas prices to increase by less than wholesale prices, because major gas retailers are largely insulated from spot prices.
“Nevertheless, sharply higher spot and forward prices suggests a sizeable increase in wholesale costs,” the budget states.
Treasury also expects rental costs to pick up considerably in the next two years, with population growth and limited housing stock putting a squeeze on the market.
National advertised rents have risen sharply over the past year, soaring by 10 per cent to September 2022.
“As new rental agreements are made and existing contracts are renegotiated, overall rental costs as reflected in the CPI are expected to rise, albeit to a lesser extent,” the budget papers state.
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