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Anthony Albanese has been accused of giving Australian families false hope about their power bills being slashed by hundreds of dollars a year as cost of living pressures worsen.

The Prime Minister led Labor to an election victory in May with a promise to cut power bills by $275 a year within three years.

But that could be hard to deliver with inflation soaring to a 32-year high, wholesale electricity prices tripling in a just a year and petrol prices tipped to surge above $2 a litre again within weeks.

Average power bills have surged by $300 since April, the competition regulator has revealed, after an energy company CEO warned of a 35 per cent increase in electricity prices by 2023.

It’s little wonder, then, that Australians are nervous about the economy, with NAB’s consumer sentiment survey for September showing consumers must find an extra $170 a week on groceries and power bills.

With 100 days until Christmas, that’s an extra $2,040 – with economists also tipping at least one more Reserve Bank interest rate rise by year’s end.

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Australians are nervous with NAB’s consumer sentiment survey for September showing consumer gearing up to spend an extra $170 a week on groceries and power bills. With 100 days till Christmas, that amounts to an extra $2,040 – as economists tip at least one more Reserve Bank interest rate rise by year’s end

Sydney radio 2GB afternoon host Jim Wilson has accused Mr Albanese and his government of making outlandish election promises that were bound to be broken.

What the banks are now expecting

COMMONWEALTH BANK: 2.85 per cent cash rate by November 2022 (up from 2.6 per cent)

ANZ: 3.6 per cent cash rate by May 2023 (up from 3.35 per cent cash rate by December)

NAB: 3.1 per cent cash rate by February 2023 (up from 2.85 per cent cash rate by November)

WESTPAC: 3.6 per cent cash rate by March 2023 (up from 3.35 per cent in February)

‘There’s no doubt electricity prices would be going up under a Coalition government as well,’ Wilson told listeners on Wednesday.

‘But Labor went to the election with an iron-clad promise to slash power bills by $275 a year by 2025.

‘If you make a promise, you keep it.’

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Average electricity bills since April have jumped by $300, or 25 per cent for a middle-income home, Australian Competition and Consumer Commission chairwoman Gina Cass-Gottlieb told a parliamentary hearing in Canberra on Wednesday.

Wilson acknowledged some factors were beyond the Labor government’s control after nine years in Opposition, such as the wild weather and floods on the east coast, that have pushed up food prices, and Russia’s Ukraine invasion, which has made crude oil more expensive.

Inflation in the year to July soared 7 per cent – the fastest pace since 1990 – and the Reserve Bank of Australia is expecting it in 2022 to hit a fresh 32-year high of 7.75 per cent.

The Big Four banks are all expecting another RBA rate rise by the of the year with the cash rate already at a nine-year high of 2.6 per cent, following six consecutive monthly interest rate rises since May.

Borrowers haven’t endured so much pain in such a short time since 1994, with Australians paying off an average $600,000 mortgage this month forced to find another $89 to service their repayments.

While inflation moderated to 6.8 per cent in August, the Australian Bureau of Statistics data showed an 18.6 per cent annual surge in fruit and vegetable prices, following flooding in south-east Queensland where many crops are grown.

Petrol prices climbed at an annual pace of 15 per cent, despite a six-month halving in fuel excise to 22.1 cents a litre which ended late last month.

This week’s average unleaded petrol prices are at $1.80 in most capital cities.

CommSec chief economist Craig James said the end of the discounting cycle in Sydney, Melbourne and Brisbane in coming weeks would push pump prices back above $2 a litre, where they were in March before the previous Coalition government halved fuel excise (pictured is a Sydney service station)

CommSec chief economist Craig James said the end of the discounting cycle in Sydney, Melbourne and Brisbane in coming weeks would push pump prices back above $2 a litre, where they were in March before the previous Coalition government halved fuel excise (pictured is a Sydney service station)

But CommSec chief economist Craig James said the end of the discounting cycle in Sydney, Melbourne and Brisbane in coming weeks would push pump prices back above $2 a litre, where they were in March before the previous Coalition government halved fuel excise.

‘The cycle will end in the next fortnight with the risk that prices could spike to $2.15 a litre,’ he said.

NAB’s consumer survey showed consumers were now expecting to spend $35 extra a week on petrol, compared with $59 more for food and groceries.

Instead of going down, Alinta Energy chief executive Jeff Dimery expects power bills to increase by 35 per cent by 2023, noting replacing coal-fired power stations with renewable energy was expensive.

The wholesale spot price of electricity in the National Electricity Market, which makes up a third of an electricity bill, hit a record average level of $264 a megawatt hour during the June quarter of 2022.

This was more than double the previous record high of $130 a megawatt hour in the March quarter of 2019, Australian Energy Market Operator data showed.

In just a year, the wholesale spot price more than tripled from $85 a megawatt hour.

A Finder analysis for October showed a family with three children were now paying, on average $440 a quarter, or $1,760 a year.

Wilson said that despite the rising costs, Labor was still suggesting it could tackle cost of living pressures.

‘I actually saw an election poster on the way to the studio today that had Labor screaming they’d save you money on your electricity bill,’ he said.

‘If I was Anthony Albanese, I would want those posters removed pronto.

‘Seriously, who on earth thought it was a good idea to make such an outlandish promise?

‘Frankly Prime Minister, you should have never made such a commitment, it’s false hope.

‘This transition to renewables, sure it looks great in a PowerPoint presentation, but it has lacked any type of thought and to be honest, it’s lacked honesty.’

Energy and Climate Change Minister Chris Bowen has suggested renewable energy is cheaper, with the Labor government last month legislating a 43 per cent reduction in carbon emissions by 2030, with support from the Greens.

Anthony Albanese (pictured) has been accused of making outlandish election promises

Anthony Albanese (pictured) has been accused of making outlandish election promises

But Wilson argued this would do little to reduce power bills in the short term.

‘Chris Bowen gets up there and bangs his chest about how spending billions of dollars on renewables will save us money,’ he said.

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‘It might save us money in 30 years but there’s no way it’s going to bring costs down anytime soon.

‘On one hand they promise to bring down your bill, but on the other hand, they’re committing to massively ramp-up renewables.’

Treasurer Jim Chalmers tried to downplay expectations power bills would come down, warning surging electricity prices would mean high inflation for longer, ahead of the October 25 Budget – Labor’s first since 2013.

‘I think one of the reasons why this inflation will hang around longer than we want it to is because there are expectations around these electricity price rises being more problematic for longer,’ Dr Chalmers told ABC Radio National on Tuesday.

‘If you think about our inflation problem over the next six or nine months, our expectation is a bigger component of that will be power prices.’

Power prices are tipped to rise by 35 per cent within months due to transition to renewable energy and shutdown of coal-fired power stations. Pictured is the coal-fired power station in Biloela, Queensland

Power prices are tipped to rise by 35 per cent within months due to transition to renewable energy and shutdown of coal-fired power stations. Pictured is the coal-fired power station in Biloela, Queensland

Mr Bowen said building more transmission networks to distribute more renewable energy would reduce power bills.

‘They are the cheapest form of energy, as our market operator says, by a country mile, and more renewable energy means that energy prices are lower than they otherwise would be,’ he told the ABC’s 7.30 program on Tuesday night.

‘The more renewables you have in the system, the lower energy prices will be.

‘The fact is that you need government policy to encourage renewable energy and that’s why we’re so committed to getting to 82 per cent renewables by 2030.’

What a 0.25 percentage point rate rise in October will mean for you

$500,000: Up $74 to $2,546 from $2,472

$600,000: Up $89 to $3,055 from $2,966 

$700,000: Up $104 to $3,564 from $3,460

$800,000: Up $118 to $4,073 from $3,955  

$900,000: Up $133 to $4,582 from $4,449

$1,000,000: Up $148 to $5,091 from $4,943 

Monthly repayments based on a Commonwealth Bank variable loan rising to 4.54 per cent from 4.29 per cent to reflect a 25 basis point increase in the Reserve Bank of Australia cash rate to 2.6 per cent from 2.35 per cent 

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