Power bill shock to in­crease re­tail pain, says ANZ

Townsville Bulletin - - NEWS - PRASHANT MEHRA

SOAR­ING elec­tric­ity prices are be­com­ing a drag for Aus­tralia’s weak­ened re­tail sec­tor, with the lat­est round of in­creases likely to fur­ther crimp con­sumer spend­ing, a new ANZ re­port says.

The sharp in­crease in en­ergy prices from July 1 will lead to the av­er­age Aus­tralian house­hold fac­ing a 10 per cent jump in elec­tric­ity bills and a 5 per cent rise in gas bills, ANZ econ­o­mists es­ti­mated.

That would trans­late into house­hold en­ergy bills go­ing up by an av­er­age of $ 200 an­nu­ally, or about 0.3 per cent of an­nual in­come.

The bill shock will re­sult in re­duced dis­cre­tionary spend­ing, adding to the chal­lenges for con­sumer spend­ing and putting Aus­tralia’s eco­nomic growth out­look un­der a cloud, the econ­o­mists say.

“Ris­ing en­ergy bills are a head­wind to con­sumer spend­ing,” ANZ se­nior econ­o­mist Joanne Masters said yes­ter­day.

“It is an ad­di­tional cost im­post for house­holds, par­tic­u­larly those on low in­comes, which are al­ready fac­ing chal­lenges.”

Based on price in­creases that came into ef­fect from July 1, some res­i­den­tial elec­tric­ity bills are set to rise by 20 per cent in NSW and South Aus- tralia, up to 8 per cent in Queens­land and 19 per cent in the ACT, while reg­u­lated prices in WA rose by around 10 per cent.

Ris­ing en­ergy prices will lead to higher head­line in­fla­tion but will also hit con­sumers’ hip pock­ets at a time of weak wages growth, record high house­hold debt and outof- cy­cle mort­gage rate hikes that have kept the coun­try’s re­tail sec­tor un­der pres­sure.

The Re­serve Bank of Aus­tralia has also re­peat­edly ex­pressed con­cerns in re­cent months that a com­bi­na­tion of prop­erty- re­lated debt and weak wage growth could cause a sharp drop in house­hold spend­ing.

ANZ’s econ­o­mists pointed out that spend­ing on elec­tric­ity, gas and other fu­els is al­ready grow­ing at the fastest rate of any cat­e­gory — up 3.5 per cent in the March quar­ter.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.