Skyrocketing energy prices will add further inflationary pressures to an already red-hot economy, with the cost-of-living crisis cited by Labor now set to worsen.
Labor frontbencher Chris Bowen on Thursday warned consumer energy prices would rise over the coming months after the Australian Energy Regulator (AER) unveiled significant surges wholesale costs would push up prices for consumers in NSW, South Australia and the south-eastern part of Queensland.
The ACT, however, is expected to see a much more muted rise in energy prices as a result of feeding tariffs placed on the territory's energy market.
In the states affected by the Default Market Offer changes, household prices are set to rise between 1.7 per cent and 8.2 per cent above inflation.
Mr Bowen used one of his first press conferences since the election to push the blame for soaring energy prices on the previous Coalition government, but claimed Labor's vision to invest in renewables would bring down prices in the long term.
"In the meantime, Australian families, who are already facing a cost-of-living crisis as a result of nine years of Liberal neglect, will be impacted by these increases in many instances," he said.
"But the better news is there is now a government with a plan in place, a plan to see more renewables, the cheapest form of energy come onto the system."
Mr Bowen did not comment on whether Labor would consider any measures to alleviate cost pressures in the interim for consumers.
High prices have in part been fuelled by the war in Ukraine jacking up the cost of global commodities, pushing the price of fossil fuels like coal, gas and oil higher.
Shortages within Australian have also been spurred on by extreme weather and flooding on the east coast impacting demand, while another factor has been lower thermal generation due to more coal power leaving the energy mix.
According the AER, wholesale costs in NSW have risen 41.4 per cent since 2021.
Westpac senior economist Justin Smirk said elevated wholesale costs over the long term would add further inflationary pressures to the economy, which is currently experiencing an inflation rate double the Reserve Bank's target band of 2 to 3 per cent.
Annual inflation printing at 5.1 per cent prompted the RBA in May to invoke the first cash-rate hike in a bid to try and cool the economy.
Mr Smirk believes if the price of oil does not fall in the coming 12 months, higher energy costs would add further inflationary pressures.
"These high wholesale prices do have an impact on retail inflation," Mr Smirk told ACM.
"Part of our forecast for why we have inflation falling back to the top of the band next year is because of falling oil prices.
"If we don't get that, just purely mathematically and not changing anything else in our equation, we could probably get a higher rate of inflation."
READ MORE:
Independent MP Zali Steggall said the inbound Labor government should look at short-term relief while the energy grid transitions to be more reliant on renewables.
"Transition takes time, but short-term cost-of-living solutions are available. For example, WA gave a $400 energy supplement payment to low-income households," she said.
"Any short-term solution should be married with solutions to get off coal and gas. I want to see Labor's Rewiring the Nation plan fast-tracked, which would accelerate the rollout of transition and decongest the grid."
Mr Smirk also noted the WA government has implemented a gas reservation policy which has made prices much cheaper out west compared to the east coast.
The Australian Chamber of Commerce and Industry wants national consensus on a plan for affordable and reliable power to bring down household and business costs.
