Federal Budget: Why Electricity and Grocery Prices Will Soar

The war in Ukraine and natural disasters will influence a prolonged cost of living challenge which will linger for “longer than we would have liked”.

While last night’s Federal Budget was heavily centred around providing families financial relief in childcare, extending paid parental leave, and providing more affordable housing, necessities including electricity and groceries will endure the effects of inflation.

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By the end of the year, it is estimated electricity prices will increase by 20 per cent, with it to blow out to 30 per cent in 2023/24.

Meanwhile, food prices forecasted to contribute 1.5 percentage points to the inflation peak.

Delivering his first Federal Budget, Treasurer Jim Chalmers said while Australia couldn’t control what was happening around the world, the budget delivered would assist families in dealing with the affects the best it could.

"A lot of the problems are coming at us from around the world, but the impacts are felt around the kitchen table,” Mr Chalmers said on ABC News Breakfast.

"When it comes to energy, we're providing cost-of-living relief in lots of ways, trying to be responsible. 

"At the same time there's more work we can do on the energy market itself, the high price of gas, the high price of coal feeding into the high price of electricity.

Mr Chalmers said inflation would peak towards the end of the year.

"Two reasons: Electricity prices, because of the war in Ukraine, and secondly, the natural disasters will push up the price of groceries because some of the flood affected communities are some of the best farming land in the world.

"So we will have a cost-of-living challenge ahead for longer than we would like [and] that's why the cost-of-living relief is important."

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