Dire warning for households as energy bills tipped to rise by 50 per cent in two years
Australians already struggling with the cost of living should brace for a sharp increase in energy bills, a line deep in the federal budget has warned.
In explaining its economic outlook for the country, Treasury estimates that electricity prices will rise by an average of 20 per cent in late 2022, before jumping by a further 30 per cent in 2023-24.
"This rise in wholesale electricity and gas prices can be expected to flow through to higher consumer prices as wholesale contracts are renewed," Treasury notes in its budget statement.
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Electricity bills could spike by up to 50 per cent in two years, budget forecasts have warned.
"Treasury has assumed retail electricity prices will increase by an average of 20 per cent nationally in late 2022, contributing to higher forecast CPI in 2022–23.
"Given forward wholesale contract prices for electricity remain elevated, retail electricity prices are expected to rise by a further 30 per cent in 2023–24."
The war in Ukraine remains a thorn in the side of domestic gas prices, which are also expected to increase by as much as 40 per cent by the end of 2024.
"Domestic wholesale gas prices remain more than double their average prior to Russia's invasion of Ukraine," the forecast notes.
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"Retail gas prices are expected to increase less than wholesale prices, by up to 20 per cent in both 2022–23 and 2023–24, as major gas retailers are somewhat insulated from spot prices, either through long-term contracts or investment in gas supplies.
"Nevertheless, sharply higher spot and forward prices suggests a sizable increase in wholesale costs."
Further budget forecasts now predict inflation in Australia to continue rising to 7.75 per cent by the end of 2022, causing more cost of living pain for households.
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Soaring wholesale electricity costs are threatening to cripple households already struggling with the cost of living. AAP
Australians can expect to be paying more for food, housing and fuel, without any real increase to wages.
"Australia is not immune to the global challenges driving higher global inflation and slower global growth. Domestic inflation is forecast to peak at 7¾ per cent in the December quarter of 2022," budget statement two reads.
"Supply disruptions have resulted in large price increases in home building, fuel and energy. Food prices remain elevated and have been further exacerbated by recent floods.
"Some of these pressures are expected to persist into 2023. In particular, electricity and gas bills are expected to rise sharply this year and next."
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