Power bills are expected to come down this year as the wholesale cost of electricity and gas has plunged, adding to hopes that an inflation slowdown late last year will extend through 2024.
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The Australian Energy Regulator said that significant falls of between 43 and 64 per cent in the cost of wholesale electricity and gas prices should show up in smaller power bills, helping ease living costs and reducing a key source of price pressures in the economy.
In its quarterly report, the regulator said forward prices for 2024 and 2025 were "now well below forward prices seen in 2022", but warned there can be a lag between shifts in wholesale costs and the prices consumers face.
Official figures due out on Wednesday are expected to show that inflation slowed further in the December quarter, with markets tipping the annual rate will have declined to from 5.4 to 4.3 per cent, its lowest point in two years.
If realised, the anticipated slowdown will strengthen expectations that interest rates have peaked.
Investors do not expect the Reserve Bank of Australia to lift the official cash rate when it meets on February 5 and 6 and have fully priced in a rate cut in September, with at least two more by mid-2025.
Evidence suggests any rates relief cannot come too soon for many households.
Australian Bureau of Statistics show retail spending fell back sharply in December as budget-conscious families pulled back on purchases after lashing out on Black Friday sales in late November.
Turnover plunged by 2.7 per cent in December, the biggest monthly decline since mid-2020, dragging annual retail sales gains down to 0.8 per cent - well below population growth.
Sales of household goods plummeted by 8.5 per cent, department store turnover was down 8.1 per cent and clothes purchases fell 5.7. Spending at cafes and restaurants was also down, dropping 1.1 per cent, while food purchases were virtually unchanged.
The results confirm economist expectations that the discount-driven jump in purchases in late November would not be sustained, and represented a shift in the timing of spending rather than an overall increase.
ABS head of retail statistics Ben Dorber said that, "consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales".
"This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November," Mr Dorber said.
Westpac senior economist Matthew Hassan said the annual growth in sales was "extremely weak...given price and population growth".
"The picture is unambiguously weak," Mr Hassan said. "Taking the two months [November and December] together, sales are only up 0.1 per cent on their September-October average."
The weakness in household spending underlines the financial pressure on households, something the federal government argues its revised stage three tax cuts will help to ease.
Prime Minister Anthony Albanese said that all taxpayers would benefit under the government's tax package.
"Our plan gives every Australian a tax cut, in every electorate. Labor and Liberal, National and independent," Mr Albanese said, including all four million taxpayers in Coalition electorates.
The Opposition is yet to formally decide on whether or not to support the government's tax plan, but leader Peter Dutton opened a new line of attack on Tuesday, claiming a "huge black hole" in the government's costings.
Mr Dutton said the Opposition had a "lot of work that we've done, just to look at the forward estimates...and question marks about whether Labor's policy is properly costed, question marks about whether it's inflationary".
But polling by the Australia Institute suggests there is majority support for the government's tax changes.
The survey of 1017 people, conducted between January 23 and 29, found 58 per cent in support of restructuring the original stage three tax cuts while just 16 per cent (including just 25 per cent of Coalition voters) favoured keeping them in their current form.
Encouragingly for the government, the poll found 65 per cent felt adapting policy to changed circumstances was more important than breaking an election promise.
But in the ACT, the territory government's large-scale feed-in tariff scheme was expected to drive a price rise in 2024-25, according to Independent Competition and Regulatory Commission. This may be by up to 17 per cent.