Hip pocket pain looks set to continue with Treasurer Jim Chalmers predicting “hard days to come”. And a key culprit is energy prices.
Consumer Price Index (CPI) figures for the September quarter were released today. No surprises, they have risen again, due in large part to those out-of-control energy costs.
The CPI, an indicator of inflation levels, rose by 1.8 per cent in the September quarter.
In the 12 months to September 2022, the CPI is up 7.3 per cent. This is the highest annual increase since 1990 – which who’s been shopping for anything in recent times already knows.
As a quick refresher, the CPI is calculated by analysing the prices of thousands of items grouped into 87 categories.
Each quarter (starting monthly from October), the Australian Bureau of Statistics (ABS) calculates the price changes of each item from the previous quarter (or month) and aggregates them to work out the inflation for the CPI as a whole.
The biggest price increases this quarter were household energy (up 10.9 per cent), furniture (up 6.6 per cent) and new house purchases (up 3.7 per cent).
Household energy prices for gas and electricity are having an oversized impact on overall inflation. And the pain is set to continue.
Energy prices have been elevated all year. This is due to several external factors, including the war in Ukraine and worldwide supply chain issues that started during the pandemic, and by our own lack of domestic energy infrastructure.
By the end of the year, Treasury says retail electricity prices will increase by 20 per cent. In 2023–24, that figure is expected to blow out to 30 per cent.
Retail gas prices are also estimated to increase by up to 20 per cent in both 2022–23 and 2023–2024.
Much of the price of energy out of Australia’s control. But a switch to renewable energy sources would reduce our reliance on energy sources from overseas.
In his Federal Budget 2022 speech, Dr Chalmers announced a $20 billion fund to upgrade Australia’s energy transmission infrastructure and drive investment in renewable production.
The fund includes $800 million for subsidies for electric cars, national electric and hydrogen charging stations and in-home solar battery storage.
Kane Thornton, chief executive of the Clean Energy Council, welcomed the announcement. He believes the investment will reduce power bills and increase reliability, while delivering environmental benefits.
“Enabling more clean, low-cost renewable energy and storage to power Australian homes and business is what will ultimately ease cost-of-living pressures,” he says.
“We’re being warned that there is more pain on the way in the short term due to our reliance on an energy system built around the failing dirty technologies of the past – unreliable coal and expensive gas.
“[The Budget] gets Australia on the right track, making the most of the renewable energy boom and setting our nation up for clean energy superpower status.”
Update: Chief executive of the Clean Energy Council is Kane Thornton, not Kate, as previously published.
Have your power bills jumped lately? Are they forcing you to cut back in other areas? Let us know in the comments section below.