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Why have Aussie utility prices been rising so rapidly?

Christopher Joye
10 January 2011

One of the RBA Bulletin article looks at the question of why utility prices have been increasing so quickly and includes some very interesting charts (see below and the capital stock chart in particular):

“Large increases in the prices of utilities have been a notable feature of consumer price inflation in Australia in recent years, and further large increases are anticipated over the next few years. The recent price rises reflect the move towards cost-based pricing, the need to replace and expand infrastructure to meet demand, and rising input costs. At times, these increases in utilities prices have had a significant effect on aggregate inflation. While international comparisons are not straightforward, the level of electricity and gas prices in Australia does not, however, appear to be particularly high compared with prices in a number of other advanced economies.”

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