The prime minister has again defended the government's decision not to offer cash handouts to Australians struggling to pay their energy bills, saying it would do more harm than good.
Last week's budget painted a bleak picture for the next couple of years, with Treasury forecasting high living costs and declining real wages.
It outlined that electricity prices would rise 56 per cent by June 2024, and gas would increase 44 per cent over the same period.
Speaking at The Australian-Melbourne Institute Outlook conference on Wednesday night, Mr Albanese said the government wanted to help households, but it had to be careful.
"My colleagues and I understand there are many people feeling the pain of rising prices, especially off the back of a decade of stagnant wages," he said.
"And the easy option would have been for us to funnel these savings straight into a 'cash splash', a one-off giveaway to buy a headline. Cheap politics and hugely expensive economics."
Mr Albanese argued that giving money to households to help cover power bills would make the problem worse.
"Instead of helping households, it would only add to the inflationary pressures that are eating away at family budgets and devaluing wages.
"What's more, it would put the independent Reserve Bank in a position where it would likely raise interest rates higher than it otherwise would," he said.
Earlier this week, the Reserve Bank of Australia (RBA) increased interest rates for the seventh consecutive month, to 2.85 per cent.
The RBA expects inflation to peak around 8 per cent this year, largely due to Russia's invasion of Ukraine and the recent floods.
When will power prices drop?
Labor promised to reduce power prices by $275 by 2025, however, when pushed on whether that would still occur, Mr Albanese would not commit.
"We know that we need to do much better," he told Channel Ten.
"We know that there is also enormous pressure due to the Russian invasion of Ukraine, which has seen global power prices spike, but we are also looking at what we can do in the short term.
"The guarantee is that renewables are the cheapest form of energy, that we will fix the transmission of the grid."
Treasurer Jim Chalmers addressed the same conference as Mr Albanese earlier in the day.
Mr Chalmers said the government could not allow forecast energy price rises to endure and the situation had forced the government to consider options that would have been unpalatable before the crisis.
"We have crossed a threshold where everybody in our cabinet — and most people in the community — accepts [that], when this is driven by a war, when prices are expected to become so extraordinarily high, they'll strangle industries. We need to do something," he said.
The government is considering a range of regulatory interventions to bring down energy prices, but has not yet announced exactly what it will do.
Shadow Treasurer Angus Taylor told the National Press Club that increasing taxes on gas suppliers would be unfair.
"You cannot get supply from gas producers if you demonise them," Mr Taylor said.
